Amtrak 2013 Annual Report Download - page 67

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National Railroad Passenger Corporation and Subsidiaries (Amtrak)
Notes to Consolidated Financial Statements (continued)
1411-1359280 28
4. Basis of Presentation and Summary of Significant Accounting Policies (continued)
Income Taxes
The Company accounts for its income taxes in accordance with FASB ASC Topic 740, Income
Taxes, which requires recognition of deferred tax assets and liabilities for future tax
consequences attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating loss and tax credit
carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary differences are expected to be
recovered or settled.
Management evaluates its potential exposures from tax positions taken that have or could be
challenged by taxing authorities. These potential exposures result because taxing authorities may
take positions that differ from those taken by management in the interpretation and application of
statutes, regulations, and rules. Management considers the possibility of alternative outcomes
based upon historical experience, previous actions by taxing authorities (e.g., actions taken in
other jurisdictions), and advice from tax experts. The Company has evaluated income tax
positions taken in prior years and believes that all positions are more likely than not to be
sustained in an audit.
Pursuant to the provisions of Title 49 of the United States Code, Section 24301, Amtrak is
exempt from all state and local taxes, including income and franchise taxes that are directly
levied against the Company. Accordingly, there is no provision for state and local income or
franchise taxes recorded in the consolidated financial statements for the fiscal years 2013 and
2012 (see Note 10).
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, disclose contingent assets
and liabilities at the date of the financial statements, and report amounts of revenues and
expenses during the reporting period.