JetBlue Airlines 2009 Annual Report Download - page 76

The effective tax rate on income (loss) before income taxes differed from the federal income tax statutory
rate for the years ended December 31 for the following reasons (in millions):
2009 2008 2007
Income tax expense (benefit) at statutory rate . . ............................... $35 $(32) $11
Increase (decrease) resulting from:
State income tax, net of federal benefit.................................... 5 (4) 2
Stock-based compensation ............................................. 1 1 3
Non-deductible meals ................................................ 2 2 2
Non-deductible costs ................................................. — 4 —
Valuation allowance .................................................. (1) 23 —
Other, net ......................................................... (1) 1 1
Total income tax expense (benefit) ......................................... $41 $ (5) $19
There were no cash payments for income taxes in 2009, 2008 and 2007.
The net deferred taxes below include a current net deferred tax asset of $78 million and a long-term net
deferred tax liability of $259 million at December 31, 2009, and a current net deferred tax asset of
$106 million and a long-term net deferred tax liability of $197 million at December 31, 2008.
The components of our deferred tax assets and liabilities as of December 31 are as follows (in millions):
2009 2008
Deferred tax assets:
Net operating loss carryforwards .................................... $203 $213
Employee benefits ............................................... 26 23
Deferred revenue/gains ............................................ 86 60
Derivative instruments ............................................ 4 54
Investment securities ............................................. 15 21
Other. . ....................................................... 26 20
Valuation allowance .............................................. (25) (26)
Deferred tax assets ............................................. 335 365
Deferred tax liabilities:
Accelerated depreciation .......................................... (512) (453)
Derivative instruments ............................................ (4) —
Other. . ....................................................... — (3)
Deferred tax liabilities .......................................... (516) (456)
Net deferred tax liability ............................................ $(181) $ (91)
At December 31, 2009, we had U.S. Federal regular and alternative minimum tax net operating loss
(“NOL”) carryforwards of $553 million and $462 million, respectively, which begin to expire in 2023. In
addition, at December 31, 2009, we had deferred tax assets associated with state NOL and credit
carryforwards of $19 million and $3 million, respectively. The state NOLs begin to expire in 2011, while the
credits carryforward indefinitely. Our NOL carryforwards at December 31, 2009 include an unrecorded benefit
of approximately $9 million related to stock-based compensation that will be recorded in equity when, and to
the extent, realized. Section 382 of the Internal Revenue Code imposes limitations on a corporation’s ability to
use its NOL carryforwards if it experiences an “ownership change.” As of December 31, 2009, our valuation
allowance did not include any amounts attributable to this limitation; however, if an “ownership change” were
to occur in the future, the ability to use our NOLs could be limited.
In evaluating the realizability of the deferred tax assets, management assesses whether it is more likely
than not that some portion, or all, of the deferred tax assets, will be realized. Management considers, among
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