SkyWest Airlines 2014 Annual Report Download - page 91

SKYWEST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2014
(4) Income Taxes (Continued)
The significant components of the Company’s net deferred tax assets and liabilities as of
December 31, 2014 and 2013 are as follows (in thousands):
As of December 31,
2014 2013
Deferred tax assets:
Intangible Asset ............................... $ 34,819 $ 36,164
Accrued benefits ............................... 43,853 40,850
Net operating loss carryforward .................... 152,361 85,885
AMT credit carryforward ......................... 17,590 17,649
Deferred aircraft credits ......................... 53,797 44,350
Accrued reserves and other ....................... 27,008 30,987
Total deferred tax assets ........................... 329,428 255,885
Valuation allowance .............................. (9,025) (3,044)
Deferred tax liabilities:
Accelerated depreciation ......................... (895,405) (824,149)
Total deferred tax liabilities ......................... (895,405) (824,149)
Net deferred tax liability ........................... $(575,002) $(571,308)
The Company’s deferred tax liabilities were primarily generated through accelerated depreciation,
combined with shorter depreciable tax lives, allowed under the IRS tax code for purchased aircraft and
support equipment compared to the Company’s US GAAP depreciation policy for such assets using the
straight-line method (see note 1 Nature of Operations and Summary of Significant Accounting
Policies).
The Company’s valuation allowance is related to certain deferred tax assets with a limited carry
forward period. The Company does not anticipate utilizing these deferred tax assets prior to the lapse
of the carry forward period.
At December 31, 2014 and 2013, the Company had federal net operating losses of approximately
$379.3 million and $191.5 million and state net operating losses of approximately $452.2 million and
$651.2 million, respectively. The estimated effective tax rate applicable to the state and federal net
operating losses as of December 31, 2014 was 35.0% and 2.6%, respectively. The Company anticipates
that the federal and state net operating losses will start to expire in 2026 and 2015, respectively. The
Company has recorded a valuation allowance for state net operating losses the Company anticipates
will expire before the benefit will be realized due to the limited carry forward periods. As of
December 31, 2014 and 2013, the Company also had an alternative minimum tax credit of
approximately $17.6 million which does not expire.
86