United Airlines 2007 Annual Report Download - page 113
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UAL Corporation and Subsidiary Companies
Combined Notes to Consolidated Financial Statements (Continued)
(6) Income Taxes (Continued)
Successor
Predecessor
(In millions)
Year Ended
December 31,
2007
Period from
February 1 to
December 31,
2006
Period from
January 1 to
January 31,
2006
Year Ended
December 31,
2005
United
Income tax provision at statutory rate $ 243 $ 20 $ 7,917 $ (7,363)
State income taxes, net of federal income tax
benefit 13 1 419 (413)
Nondeductible employee meals 10 9 1 11
Nondeductible interest expense 21 — — —
Medicare Part D Subsidy (2) (12) (2) (17)
Valuation allowance — — (8,397) 7,779
Share-based compensation 2 5 — —
Other, net 9 6 62 3
$ 296 $ 29 $ — $ —
Temporary differences and carry forwards that give rise to a significant portion of deferred tax assets and liabilities at December 31, 2007 and 2006 were as
follows:
UAL
United
December 31,
December 31,
(In millions)
2007
2006
2007
2006
Deferred income tax asset (liability):
Employee benefits, including postretirement, medical and ESOP $ 1,292 $ 1,416 $ 1,322 $ 1,445
Federal and state net operating loss carry forwards 2,458 2,709 2,473 2,722
Mileage Plus deferred revenue 1,216 1,242 1,220 1,245
AMT credit carry forwards 297 291 297 291
Restructuring charges 170 223 165 218
Other asset 290 1,802 282 1,199
Less: Valuation allowance (1,815) (2,248) (1,757) (2,190)
Total deferred tax assets $ 3,908 $ 5,435 $ 4,002 $ 4,930
Depreciation, capitalized interest and other $ (3,165) $ (3,139) $ (3,161) $ (3,168)
Gains on sale and leasebacks (12) (9) (3) —
Aircraft rent (31) (46) (25) (40)
Intangibles (913) (964) (959) (1,010)
Other liability (347) (1,843) (337) (1,194)
Total deferred tax liabilities $ (4,468) $ (6,001) $ (4,485) $ (5,412)
Net deferred tax liability $ (560) $ (566) $ (483) $ (482)
The federal and state NOL carry forwards relate to prior years' NOLs which may be carried forward to reduce the tax liabilities of future years. This tax
benefit is mostly attributable to federal pre-tax NOL carry forwards of $6.6 billion. If not utilized, the federal tax benefits of $1.0 billion expire
104
Source: UNITED AIR LINES INC, 10-K, February 29, 2008