United Airlines 2009 Annual Report Download - page 106

Table of Contents
Temporary differences and carry forwards that give rise to a significant portion of deferred tax assets and liabilities at December 31, 2009 and 2008 were
as follows:
UAL United
December 31, December 31,
(In millions) 2009 2008 2009 2008
Deferred income tax asset (liability):
Employee benefits, including postretirement and
medical $ 1,328 $ 1,345 $ 1,358 $ 1,374
Federal and state net operating loss carry forwards 2,707 2,622 2,697 2,622
Mileage Plus deferred revenue 1,644 1,541 1,647 1,545
AMT credit carry forwards 287 298 287 298
Fuel hedge unrealized losses — 294 — 294
Restructuring charges 104 139 99 134
Other asset 291 337 284 329
Less: Valuation allowance (3,060) (2,886) (2,977) (2,812)
Total deferred tax assets $ 3,301 $ 3,690 $ 3,395 $ 3,784
Depreciation, capitalized interest and other $ (2,686) $ (2,961) $ (2,682) $ (2,958)
Intangibles (787) (864) (834) (910)
Fuel hedge unrealized gains (14) — (14) -
Other liability (303) (401) (277) (375)
Total deferred tax liabilities $ (3,790) $ (4,226) $ (3,807) $ (4,243)
Net deferred tax liability $ (489) $ (536) $ (412) $ (459)
The federal and state NOL carry forwards relate to prior years’ NOLs, which may be used to reduce tax liabilities in future years. This tax benefit is mostly
attributable to federal pre-tax NOL carry forwards of $7.3 billion. If not utilized, the federal tax benefits will expire as follows: $1.0 billion in 2022, $0.4 billion
in 2023, $0.5 billion in 2024, $0.4 billion in 2025, and a total of $0.2 billion between 2026 and 2029. In addition, the majority of the state tax benefit of
$157 million, if not utilized, expires over a five to twenty year period.
At this time, the Company does not believe that the limitations imposed by the Internal Revenue Code on the usage of the NOL carry forward and other
tax attributes following an ownership change will have an effect on the Company. Therefore, the Company does not believe its exit from bankruptcy has had any
material impact on the utilization of its remaining NOL carry forward and other tax attributes.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income (including the reversals of deferred tax liabilities)
during the periods in which those temporary differences will become deductible. The Company’s management assesses the realizability of its deferred tax assets,
and records a valuation allowance for the deferred tax assets when it is more likely than not that a portion, or all of the deferred tax assets, will not be realized. As
a result, the Company has a valuation allowance against its deferred tax assets as of December 31, 2009 and 2008, to reflect management’s assessment regarding
the realizability of those assets. The Company expects to continue to maintain a valuation allowance on deferred tax assets until there is sufficient positive
evidence of future realization. The current valuation allowance of $3,060 million and $2,977 million for UAL and United, respectively, if reversed in future years
will reduce income tax expense. The current valuation allowance reflects an increase from December 31, 2008 of $174 million and $165 million for UAL and
United, respectively.
In addition to the deferred tax assets listed above, the Company has an $803 million unrecorded tax benefit at December 31, 2009 attributable to the
difference between the amount of the financial statement expense and the allowable tax deduction for UAL common stock issued to certain unsecured creditors
and employees
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