OfficeMax 2008 Annual Report Download - page 71

The tax effects of temporary differences that give rise to significant portions of the deferred tax
assets and deferred tax liabilities at year-end are presented below.
2008 2007
(thousands)
Current deferred tax assets (liabilities) attributable to
Accrued expenses ......................................... $ 38,229 $ 50,045
Net operating loss carryforwards ............................... 3,561 7,213
Allowances for receivables and rebates .......................... 18,219 29,605
Compensation and benefits .................................. 7,627 23,397
Inventory ................................................ 11,863 3,780
Property and equipment ..................................... 13,911 16,754
Alternative minimum tax and other credit carryforwards .............. — 53,919
Other .................................................. 5,858 357
Total current net deferred tax assets .......................... $ 99,268 $ 185,070
Noncurrent deferred tax assets (liabilities) attributable to
Timberland installment gain .................................. (266,798) (543,763)
Deferred gain on Boise Cascade, LLC Investment .................. 69,925 69,925
Alternative minimum tax and other credit carryforwards .............. 28,303 188,033
Impaired Lehman note receivable .............................. 286,207 —
Compensation and benefits .................................. 212,418 103,065
Net operating loss carryforwards ............................... 24,239 40,381
Reserves ................................................ 20,734 24,864
Investments .............................................. 23,413 6,399
Goodwill ................................................ 9,774 (30,802)
Other non-current liabilities ................................... 9,938 5,179
Undistributed earnings ...................................... (4,606) (4,955)
Deferred charges .......................................... 2,268 2,086
Property and equipment ..................................... 33,988 15,505
Other temporary differences .................................. 12 21
449,815 (124,062)
Less: Valuation allowance .................................... (13,633) (30,300)
Total noncurrent net deferred tax assets (liabilities) ............... $ 436,182 $(154,362)
As discussed in Note 3, ‘‘Timber Notes Receivable’’, as part of the Sale, the Company sold its
timberlands for cash and credit enhanced installment notes. The note structure allowed the
Company to defer recognition of the capital gain and payment of the related taxes (approximately
$543 million) on the sale until 2019, the scheduled maturity date of the installment notes. On
September 15, 2008, Lehman, the guarantor of one half of the installment notes, filed a bankruptcy
petition seeking relief under chapter 11 of the United States Bankruptcy Code. Therefore,
approximately half of the deferred tax gain was accelerated and the related taxes became due and
payable in 2008. The Company had available alternative minimum tax credits, a portion which
resulted from tax payments related to the Sale, which were used to reduce the cash taxes triggered
by the Lehman bankruptcy. All cash tax payments due related to the installment note have been
made as of December 27, 2008. The Company has an income tax receivable balance of
$5.9 million as of December 27, 2008.
In assessing the realizability of deferred tax assets, management considers whether it is more
likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of future taxable income during
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