Sallie Mae 2006 Annual Report Download - page 198

19. Income Taxes (Continued)
At December 31, 2006 and 2005, the tax effect of temporary differences that give rise to deferred tax
assets and liabilities include the following:
2006 2005
December 31,
Deferred tax assets:
Loan reserves ............................................. $321,467 $208,343
Market value adjustments on investments ......................... 279,347 184,313
Deferred revenue ........................................... 59,825 138,102
Accrued expenses not currently deductible ........................ 57,863 55,452
Operating loss and credit carryovers ............................. 57,125 5,738
Warrants issuance .......................................... 42,132 49,448
Stock-based compensation plans................................ 34,054 6,328
Partnership income ......................................... 21,629 35,568
Loan origination services ..................................... 12,652 17,706
In-substance defeasance transactions ............................ — 4,718
Other.................................................... 29,664 24,521
Total deferred tax assets...................................... 915,758 730,237
Deferred tax liabilities:
Securitization transactions .................................... 387,290 132,879
Unrealized investment gains recorded to other comprehensive income .... 183,684 197,834
Contingent payment debt instruments ............................ 100,632 78,934
Leases ................................................... 92,382 155,889
Depreciation/amortization .................................... 57,856 51,987
In-substance defeasance transactions ............................ 9,930 —
Other.................................................... 9,085 10,128
Total deferred tax liabilities ................................... 840,859 627,651
Net deferred tax assets ....................................... $ 74,899 $102,586
Included in other deferred tax assets is a valuation allowance of $3,778 and $0 as of December 31, 2006
and 2005, respectively, against a portion of the Company’s state deferred tax assets. The ultimate realization of
the deferred tax assets is dependent upon the generation of future taxable income during the period in which
the temporary differences become deductible. Management primarily considers the scheduled reversals of
deferred tax liabilities and the history of positive taxable income in making this determination. The valuation
allowance primarily relates to state deferred tax assets for which subsequently recognized tax benefits will be
allocated to goodwill.
As of December 31, 2006, the Company has federal net operating loss carryforwards of $134,859 which
begin to expire in 2021, apportioned state net operating loss carryforwards of $130,407 which begin to expire
in 2007, and federal and state credit carryovers of $1,279 which begin to expire in 2020.
During 2006, the Company and the IRS reached agreement with regard to all open issues associated with
the examination of the Company’s 2002 and prior year U.S. federal income tax returns. The IRS is currently
completing its examination of the Company’s 2003 and 2004 U.S. federal income tax returns.
F-79
SLM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts, unless otherwise stated)