Waste Management 2007 Annual Report Download - page 119

additional $12 million of our accumulated foreign earnings resulting in an increase in tax expense of $3 million. No
additional foreign earnings were repatriated during 2007.
At December 31, 2007, remaining unremitted earnings in foreign operations were approximately $400 million,
which are considered permanently invested and, therefore, no provision for U.S. income taxes has been accrued for
these unremitted earnings.
Deferred tax assets (liabilities)
The components of the net deferred tax assets (liabilities) at December 31 are as follows (in millions):
2007 2006
December 31,
Deferred tax assets:
Net operating loss, capital loss and tax credit carryforwards ............... $ 178 $ 326
Landfill and environmental remediation liabilities ....................... 35 61
Miscellaneous and other reserves ................................... 241 243
Subtotal ................................................ 454 630
Valuation allowance ............................................. (168) (288)
Deferred tax liabilities:
Property and equipment ........................................ (957) (1,011)
Goodwill and other intangibles ................................. (689) (614)
Net deferred tax liabilities ..................................... $(1,360) $(1,283)
At December 31, 2007 we had $27 million of federal net operating loss, or NOL, carryforwards, $2.0 billion of
state NOL carryforwards, and $13 million of Canadian NOL carryforwards. The federal and state NOL carryfor-
wards have expiration dates through the year 2027. The Canadian NOL carryforwards have the following expiry:
$11 million in 2009 and $2 million in 2015. In addition, we have $42 million of state tax credit carryforwards at
December 31, 2007.
We have established valuation allowances for uncertainties in realizing the benefit of tax loss and credit
carryforwards and other deferred tax assets. While we expect to realize the deferred tax assets, net of the valuation
allowances, changes in estimates of future taxable income or in tax laws may alter this expectation. The valuation
allowance decreased $120 million in 2007. We realized a $9 million state tax benefit due to a reduction in the
valuation allowance related to the expected utilization of state NOL and credit carryforwards. The remaining
reduction in our valuation allowance was offset by changes in our gross deferred tax assets due to changes in state
NOL and credit carryforwards and our adoption of FIN 48.
Liabilities for uncertain tax positions
As discussed in Note 2, we adopted FIN 48 and FSP No. 48-1 effective January 1, 2007. As a result of both of
these adoptions, we recognized, as a cumulative effect of change in accounting principle, a $28 million increase in
our liabilities for unrecognized tax benefits, a $32 million increase in our non-current deferred tax assets and a
$4 million increase in our beginning retained earnings.
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WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)