Southwest Airlines 2009 Annual Report Download - page 93

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
December 31, 2009
16. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The
components of deferred tax assets and liabilities at December 31, 2009 and 2008, are as follows:
(In millions) 2009 2008
DEFERRED TAX LIABILITIES:
Accelerated depreciation .......................................... $2,893 $2,760
Other ......................................................... 40 29
Total deferred tax liabilities ................................... 2,933 2,789
DEFERRED TAX ASSETS:
Fuel derivative instruments ........................................ 343 567
Deferred gains from sale and leaseback of aircraft ...................... 55 60
Capital and operating leases ....................................... 38 47
Accrued employee benefits ........................................ 220 211
Stock-based compensation ........................................ 86 93
State taxes ..................................................... 70 69
Business partner income .......................................... 77 81
Net operating losses and credit carrybacks ............................ 56 —
Other ......................................................... 72 86
Total deferred tax assets ...................................... 1,017 1,214
Net deferred tax liability ...................................... $1,916 $1,575
The provision for income taxes is composed of the following:
(In millions) 2009 2008 2007
CURRENT:
Federal .................................................... $(24) $ 23 $108
State ...................................................... (1) 10 9
Total current ............................................ (25) 33 117
DEFERRED:
Federal .................................................... 79 80 246
State ...................................................... 11 (13) 50
Total deferred ........................................... 90 67 296
$ 65 $100 $413
The effective tax rate on income before income taxes differed from the federal income tax statutory rate for
the following reasons:
(In millions) 2009 2008 2007
Tax at statutory
U.S. tax rates ................................................ $58 $ 97 $370
Nondeductible items .............................................. 5 10 6
State income taxes, net of federal benefit .............................. 6 (2) 38
Other, net ...................................................... (4) (5) (1)
Total income tax provision ..................................... $65 $100 $413
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