OfficeMax 2010 Annual Report Download - page 77

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 in the following table:
2010 2009
(thousands)
Impairment of note receivable .............................................. $286,207 $ 286,207
Minimum tax and other credits carryover ..................................... 230,267 237,897
Net operating loss carryovers ............................................... 109,423 104,605
Deferred gain on Boise Investment .......................................... 69,925 69,925
Compensation obligations ................................................. 146,369 154,400
Operating reserves and accrued expenses ..................................... 63,205 59,682
Investments and deferred charges ........................................... 5,136 18,110
Property and equipment ................................................... 4,937 15,942
Allowances for receivables ................................................. 12,764 14,253
Inventory ............................................................... 4,167 8,699
Tax goodwill ............................................................ 4,587 6,788
Other .................................................................. 4,804 3,064
Total deferred tax assets ................................................... 941,791 979,572
Valuation allowance on NOLs and credits ..................................... (14,726) (16,117)
Total deferred tax assets after valuation allowance .............................. $927,065 $ 963,455
Timberland installment gain related to Wachovia Note ........................... $(266,798) $(266,798)
Timberland installment gain related to Lehman Note ............................ (276,965) (276,965)
Undistributed earnings .................................................... (5,817) (4,606)
Total deferred tax liabilities ................................................ (549,580) (548,369)
Total net deferred tax assets ................................................ $377,485 $ 415,086
Deferred tax assets and liabilities are reported in our Consolidated Balance Sheets as follows:
2010 2009
(thousands)
Current deferred income tax assets ............................................ $ 92,956 $114,186
Long-term deferred income tax assets ......................................... 284,529 300,900
Total ............................................................... $377,485 $415,086
As discussed in Note 4, “Timber Notes/Non-Recourse Debt,” at the time of the sale of the timberlands in
2004, we generated a tax gain and recognized the related deferred tax liability. The timber installment notes
structure allowed the Company to defer the resulting tax liability of $543 million until 2020, the maturity date for
the Lehman Guaranteed Installment Note. Due to the Lehman bankruptcy and note defaults, the recognition of
the Lehman portion of the gain will be triggered when the Lehman Guaranteed Installment Note is transferred to
the Securitization Note holders as payment and/or when the Lehman bankruptcy is resolved. At that time, we
expect to reduce the estimated cash payment due by utilizing our available alternative minimum tax credits.
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 the periods in which those temporary
differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected
future taxable income, and tax planning strategies in making the assessment of whether it is more likely than not
that some portion or all of the deferred tax assets will not be realized. Management believes it is more likely than
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