Quest Diagnostics 2011 Annual Report Download - page 91

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets
(liabilities) at December 31, 2011 and 2010 were as follows:
2011 2010
Current deferred tax assets:
Accounts receivable reserves. . . ............................................ $ 85,485 $ 70,608
Liabilities not currently deductible ......................................... 67,843 71,862
Total current deferred tax assets ......................................... $ 153,328 $ 142,470
Non-current deferred tax assets (liabilities):
Liabilities not currently deductible ......................................... $ 151,621 $ 142,043
Stock-based compensation ................................................. 72,262 73,661
Capitalized R&D expense ................................................. 16,899 —
Net operating loss carryforwards, net of valuation allowance ................ 121,234 37,012
Depreciation and amortization . ............................................ (528,129) (438,617)
Total non-current deferred tax liabilities, net . . . .......................... $(166,113) $(185,901)
At December 31, 2011 and 2010, non-current deferred tax assets of $18 million and $7 million, respectively,
are recorded in other long-term assets in the consolidated balance sheet. At December 31, 2011 and 2010, non-
current deferred tax liabilities of $184 million and $193 million, respectively, are included in other long-term
liabilities in the consolidated balance sheet.
As of December 31, 2011, the Company had estimated net operating loss carryforwards for federal and state
income tax purposes of $213 million and $909 million, respectively, which expire at various dates through 2031.
Estimated net operating loss carryforwards for foreign income tax purposes are $76 million at December 31,
2011, some of which can be carried forward indefinitely while others expire at various dates through 2022. As of
December 31, 2011 and 2010, deferred tax assets associated with net operating loss carryforwards of $152
million and $50 million, respectively, have each been reduced by a valuation allowance of $31 million and $13
million, respectively.
Income taxes payable including those classified in other long-term liabilities in the consolidated balance
sheets at December 31, 2011 and 2010, were $164 million and $128 million, respectively.
The total amount of unrecognized tax benefits as of and for the years ended December 31, 2011, 2010 and
2009 consisted of the following:
2011 2010 2009
Balance, beginning of year . . . ...................................... $151,554 $126,454 $ 70,877
Additions:
For tax positions of current year ................................. 63,343 20,904 69,219
For tax positions of prior years .................................. 9,196 28,140 22,462
Reductions:
Changes in judgment ............................................ (13,543) (13,467) (11,551)
Expirations of statutes of limitations. . ............................ (2,952) (10,477) (4,926)
Settlements ..................................................... (12,737) — (19,627)
Balance, end of year............................................... $194,861 $151,554 $126,454
The contingent liabilities for tax positions primarily relate to uncertainties associated with the realization of
tax benefits derived from certain state net operating loss carryforwards, the allocation of income and expense
among state jurisdictions, the characterization and timing of certain tax deductions associated with business
combinations and employee compensation, income and expenses associated with certain intercompany licensing
arrangements, and the deductibility of certain settlement payments.
The total amount of unrecognized tax benefits as of December 31, 2011, that, if recognized, would affect the
effective income tax rate from continuing operations is $103 million. Based upon the expiration of statutes of
limitations, settlements and/or the conclusion of tax examinations, the Company believes it is reasonably possible
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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(dollars in thousands unless otherwise indicated)