Jack In The Box 2011 Annual Report Download - page 66

Table of Contents
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The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities at each year-end are
presented below (in thousands):
 
Deferred tax assets:
Accrued pension and postretirement benefits $ 82,706 $ 57,817
Accrued insurance 14,263 13,603
Leasing transactions 9,348 11,290
Accrued vacation pay expense 6,605 8,528
Deferred income 2,268 2,436
Other reserves and allowances 29,127 33,893
Tax loss and tax credit carryforwards 4,025 4,087
Share-based compensation 18,853 16,708
Other, net 4,620 4,515
Total gross deferred tax assets 171,815 152,877
Valuation allowance (4,025) (4,087)
Total net deferred tax assets 167,790 148,790
Deferred tax liabilities:
Property and equipment, principally due to differences in depreciation (32,677) (38,250)
Intangible assets (24,021) (23,394)
Total gross deferred tax liabilities (56,698) (61,644)
Net deferred tax assets $ 111,092 $ 87,146
Deferred tax assets at October 2, 2011 include state net operating loss carryforwards of approximately $62.7 million expiring at various times between
2012 and 2029. At October 2, 2011 and October 3, 2010, we recorded a valuation allowance related to state net operating losses of $4.0 million and $4.1
million, respectively. The current year change in the valuation allowance of $0.1 million relates to net operating losses. We believe that it is more likely
than not that these loss carryforwards will not be realized and that the remaining deferred tax assets will be realized through future taxable income or
alternative tax strategies.
At October 3, 2010, our gross unrecognized tax benefits associated with uncertain income tax positions were $0.6 million, which if recognized, would
favorably affect the effective income tax rate. As of October 2, 2011, the gross unrecognized tax benefits remain unchanged. A reconciliation of the
beginning and ending amount of unrecognized tax benefits follows ( in thousands):
 
Balance beginning of year $ 629 $ 608
Increases to tax positions recorded during current years - 200
Reductions to tax positions due to settlements with taxing authorities - (179)
Balance at end of year $ 629 $ 629
From time to time, we may take positions for filing our tax returns which may differ from the treatment of the same item for financial reporting
purposes. The ultimate outcome of these items will not be known until the IRS has completed its examination or until the statute of limitations has
expired.
It is reasonably possible that changes of approximately $0.4 million to the gross unrecognized tax benefits will be required within the next twelve months.
These changes relate to the possible settlement of state tax audits.
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