US Airways 2005 Annual Report Download - page 143

Table of Contents
US Airways Group, Inc.
Notes to Consolidated Financial Statements — (Continued)
results for America West Holdings and AWA and the short period financial results for the period beginning on September 27, 2005 through December 31,
2005 for US Airways.
Amounts recorded for income tax expense (benefit) by US Airways Group for the years ended December 31, 2005, 2004 and 2003 were insignificant to
the financial statements.
Income tax expense (benefit) differs from amounts computed at the federal statutory income tax rate as follows (in millions):
Year Ended December 31,
2005 2004 2003
Income tax expense (benefit) at the federal statutory income tax rate $ (188) $ (31) $ 20
State income tax expense (benefit), net of federal income tax expense (benefit) — (3) 2
Change in state deferreds (15) — (3)
Change in valuation allowance 218 32 (17)
Book expense not deductible for tax (4) — —
Indefinite lived asset to goodwill (13) — —
Other, net 2 2 (2)
Total $ — $ — $ —
As of December 31, 2005, US Airways Group has available net operating loss carryforwards ("NOLs") and tax credit carryforwards for federal income tax
purposes of approximately $1.43 billion and $25 million, respectively. The NOLs expire during the years 2020 through 2026. As of December 31, 2005,
US Airways Group also had capital loss carryforwards for federal income tax purposes of approximately $1 million which expire in 2008. Further, as a result
of a statutory "ownership change" (as defined for purposes of Section 382 of the Internal Revenue Code) that occurred as a result of America West Holdings'
merger with US Airways Group on September 27, 2005, US Airways Group's ability to utilize its NOLs and tax credit carryforwards may be restricted.
AWA and the IRS favorably reached an agreement to carryforward all pre-1994 NOLs that were restricted, as a result of a statutory "ownership change"
(as defined for purposes of Section 382 of the Internal Revenue Code) that occurred as a result of AWA's reorganization in 1994.
The settlement with the IRS allowed AWA to utilize all pre-1994 NOLs of $546 million in total by the end of tax year 1999, as well $36 million of the
1994 NOL. The balance of the 1994 NOL of $9 million and the 1996 NOL of $5 million were used in total during the period ended December 31, 2000. The
remaining December 31, 2000 taxable income was reduced by 2001 NOL carry back of $27 million. After the settlement, the balance of the NOL
carryforward into December 31, 2003 is $337 million. 137