Time Magazine 2009 Annual Report Download - page 109

The differences between income taxes (tax benefits) expected at the U.S. federal statutory income tax rate of
35% and income taxes (tax benefits) provided are as set forth below (millions):
2009 2008 2007
Years Ended December 31,
(recast) (recast)
Taxes (tax benefits) on income at U.S. federal statutory rate ...... $ 1,149 $(1,539) $ 961
State and local taxes (tax benefits), net of federal tax effects...... 79 (99) 63
Nondeductible goodwill impairments ....................... — 2,208 —
Litigation matters ..................................... — 107 —
Valuation allowances ................................... 19 — (102)
Other .............................................. (53) 15 (63)
Total ............................................... $ 1,194 $ 692 $ 859
Significant components of Time Warner’s net deferred tax liabilities are as follows (millions):
2009 2008
December 31,
(recast)
Deferred tax assets:
Tax attribute carryforwards ..................................... $ 706 $ 587
Receivable allowances and return reserves .......................... 337 308
Royalties, participations and residuals . . ........................... 353 377
Investments ................................................. 208 299
Equity-based compensation ..................................... 1,187 1,282
Amortization and Depreciation .................................. 559 999
Other ..................................................... 1,287 1,568
Valuation allowances
(a)
........................................ (701) (788)
Total Deferred tax assets ..................................... $ 3,936 $ 4,632
Deferred tax liabilities:
Assets acquired in business combinations ........................... $ 3,821 $ 4,087
Unbilled television receivables ................................... 861 1,025
Unremitted earnings of foreign subsidiaries ......................... 182 116
Total Deferred tax liabilities ................................... 4,864 5,228
Net deferred tax liability
(b)
..................................... $ 928 $ 596
(a)
The Company has recorded valuation allowances for certain tax attributes and other deferred tax assets. As of December 31, 2009, sufficient
uncertainty exists regarding the future realization of these deferred tax assets. If in the future the Company believes that it is more likely than
not that these deferred tax benefits will be realized, the majority of the valuation allowances will be recognized in the statement of
operations.
(b)
The net deferred tax liability includes current deferred tax assets of $670 million and $565 million as of December 31, 2009 and 2008,
respectively.
U.S. income and foreign withholding taxes have not been recorded on permanently reinvested earnings of
certain foreign subsidiaries aggregating approximately $1.6 billion at December 31, 2009. Determination of the
amount of unrecognized deferred U.S. income tax liability with respect to such earnings is not practicable.
U.S. federal tax attribute carryforwards at December 31, 2009, consist primarily of approximately $85 million
of tax benefit attributable to tax losses and $244 million of foreign tax credits. U.S. state and local tax attribute
97
TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)