US Airways 2005 Annual Report Download - page 255

Table of Contents
US Airways, Inc.
Notes to the Financial Statements — (Continued)
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of December 31, 2005 and 2004
are as follows (in millions):
2005 2004
Deferred tax assets:
Employee benefits $ 266 $ 1,154
Net operating loss carryforwards 309 299
Other deferred tax assets 185 179
AMT credit carryforward 25 25
Leasing transactions — 9
Valuation allowance (156) (822)
Net deferred tax assets 629 844
Deferred tax liabilities:
Depreciation and amortization 364 641
Sale and leaseback transactions and deferred rent 145 112
Leasing transactions 28 —
Other deferred tax liabilities 123 105
Total deferred tax liabilities 660 858
Net deferred tax liabilities 31 14
Less: current deferred tax liabilities — —
Noncurrent deferred tax liabilities $ 31 $ 14
Included in the employee benefit deferred tax assets at December 31, 2005 and 2004, among other items, are $90 million and $661 million, respectively,
related to obligations of postretirement medical benefits.
US Airways will be filing a full 12-month return as part of its consolidated filing with US Airways Group. The current tax provision for the nine months
ended September 30, 2005 and the three months ended December 31, 2005 was prepared in accordance with this tax return methodology. As of December 31,
2005, US Airways had a $786 million federal net operating loss carryforward with $52 million expiring in 2023, $551 million expiring in 2024, and
$183 million expiring in 2025 and $25 million of alternative minimum tax credits which do not expire. US Airways filed for bankruptcy protection on
September 12, 2004 and emerged on September 27, 2005. As a result of the bankruptcy proceedings, the federal and state net operating loss carryforwards
were reduced by cancellation of debt income of $113 million. Additionally, US Airways Group had a change of ownership upon emergence from bankruptcy
and its issuance of new common stock. Internal Revenue Code Section 382 substantially limits the annual usage of remaining tax attributes that were
generated prior to the change in ownership.
At December 31, 2003, the federal and state net operating loss carryforwards were reduced by discharge of indebtedness income of $1.2 billion that
resulted from the August 2002 bankruptcy proceedings. In addition, an Internal Revenue Code Section 382 change of ownership occurred for US Airways
Group upon emergence from the first bankruptcy and issuance of new common stock. Section 382 substantially limits the annual usage of tax attributes that
were generated prior to the change in ownership date.
The federal income tax returns of US Airways through 2002 have been examined and settled with the Internal Revenue Service. US Airways is not
currently under examination. 249