US Airways 2009 Annual Report Download - page 130

Table of Contents
2009. At December 31, 2009, the federal and state valuation allowance is $575 million and $78 million, respectively, all of which will
reduce future tax expense when recognized.
For the year ended December 31, 2009, US Airways recorded a tax benefit of $38 million. Of this amount, $21 million was due to a
non-cash income tax benefit related to gains recorded within other comprehensive income during 2009. Generally accepted accounting
principles ("GAAP") require all items be considered (including items recorded in other comprehensive income) in determining the
amount of tax benefit that results from a loss from continuing operations that should be allocated to continuing operations. In accordance
with GAAP, US Airways recorded a tax benefit on the loss from continuing operations, which was exactly offset by income tax expense
on other comprehensive income as follows:
Change in
Net Loss Income Other Comprehensive
Statement Income
Pre-allocation $ (161) $ 37
Tax allocation 21 (21)
As presented $ (140) $ 16
As the income tax expense on other comprehensive income is equal to the income tax benefit recognized in continuing operations, US
Airways' total comprehensive loss is unchanged. In addition, US Airways' net deferred tax position at December 31, 2009 is not impacted
by this tax allocation.
In addition, US Airways recorded a $14 million benefit related to a legislation change allowing it to carry back 100% of 2008
Alternative Minimum Tax liability ("AMT") net operating losses, resulting in the recovery of AMT amounts paid in prior years. US
Airways also recognized a $3 million tax benefit related to the reversal of the deferred tax liability associated with the indefinite lived
intangible assets that were impaired during 2009.
For the year ended December 31, 2008, US Airways reported a loss, which increased its NOLs, and it did not record a tax provision.
For the year ended December 31, 2007, US Airways utilized NOLs to reduce its income tax obligation. Utilization of these NOLs
resulted in a corresponding decrease in the valuation allowance. As this valuation allowance was established through the recognition of
tax expense, the decrease in valuation allowance offset US Airways' tax provision dollar for dollar. US Airways recognized $7 million of
non-cash state income tax expense for the year ended December 31, 2007, as US Airways utilized NOLs that were generated prior to the
merger. As these were acquired NOLs, the accounting rules in place at that time required that the decrease in the valuation allowance
associated with these NOLs reduce goodwill instead of the provision for income taxes.
US Airways is subject to AMT. In most cases, the recognition of AMT does not result in tax expense. However, since US Airways' net
deferred tax asset is subject to a full valuation allowance, any liability for AMT is recorded as tax expense. US Airways recorded AMT
expense of $1 million for the year ended December 31, 2007. US Airways also recorded $1 million of state income tax related to certain
states where NOLs were not available or limited for the year ended December 31, 2007.
The components of the provision (benefit) for income taxes are as follows (in millions):
Year Ended December 31,
2009 2008 2007
Current provision:
Federal $ — $ 1 $ 1
State — — 1
Total current — 1 2
Deferred provision:
Federal (38) — (1)
State — (1) 6
Total deferred (38) (1) 5
Provision (benefit) for income taxes $ (38) $ — $ 7
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