US Airways 2006 Annual Report Download - page 162

Table of Contents
America West Airlines, Inc.
Notes to Consolidated Financial Statements — (Continued)
Income tax expense (benefit) differs from amounts computed at the federal statutory income tax rate as follows (in millions):
Year Ended December 31,
2006 2005 2004
Income tax expense (benefit) at the federal statutory income tax rate $ (11) $ (139) $ (30)
State income tax expense (benefit), net of federal income tax expense (benefit) (1) — (3)
Change in state deferred tax items 1 (15) —
Change in valuation allowance 7 156 31
Book expense not deductible for tax 3 — —
AMT provision 5 — —
Other, net 1 (2) 2
Total $ 5 $ — $ —
Effective tax rate (16.2)% — —
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of
December 31, 2006 and 2005 are as follows (in millions):
2006 2005
Deferred tax assets:
Net operating loss carryforwards $ 128 $ 236
Property, plant and equipment 9 9
Employee benefits 27 20
Dividend miles awards 67 4
AMT credit carryforward 7 1
Other deferred tax assets 41 16
Valuation allowance (270) (285)
Net deferred tax assets 9 1
Deferred tax liabilities:
Depreciation and amortization 27 23
Sale and leaseback transactions and deferred rent (19) (23)
Other deferred tax liabilities 1 1
Total deferred tax liabilities 9 1
Net deferred tax liabilities $ — $ —
The reason for significant differences between taxable and pretax book income primarily relates to depreciation on fixed assets,
employee pension and postretirement benefit costs, employee-related accruals and leasing transactions.
9. Employee Benefit Plans
(a) Defined Contribution Plan
America West Holdings has a 401(k) defined contribution plan, covering substantially all employees of AWA. Participants may
contribute from 1% to 50% of their pretax earnings, up to a maximum of $15,000 in 2006. AWA's
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