Southwest Airlines 2010 Annual Report Download - page 105
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The provision for income taxes is composed of the following:
(In millions) 2010 2009 2008
CURRENT:
Federal .................................................... $198 $(24) $ 23
State ...................................................... 19 (1) 10
Total current ............................................ 217 (25) 33
DEFERRED:
Federal .................................................... 61 79 80
State ...................................................... 8 11 (13)
Total deferred ........................................... 69 90 67
$286 $ 65 $100
The effective tax rate on income before income taxes differed from the federal income tax statutory
rate for the following reasons:
(In millions) 2010 2009 2008
Tax at statutory
U.S. tax rates ................................................ $261 $58 $ 97
Nondeductible items .............................................. 8 5 10
State income taxes, net of federal benefit .............................. 18 6 (2)
Other, net ...................................................... (1) (4) (5)
Total income tax provision ..................................... $286 $65 $100
During 2010, the Company established unrecognized tax benefits of approximately $4 million, the majority
of which related to prior years’ tax positions. If recognized, the unrecognized tax benefits at December 31, 2010
would prospectively impact the Company’s effective tax rate. No reserves for uncertain income tax positions had
been recorded based on the Company’s assessment of its tax positions as of December 31, 2009.
The Company has identified its federal tax return and its state tax returns in California and Texas as “major”
tax jurisdictions, as defined. For the year 2010, the Company had tax net operating loss carry forwards of
approximately $3 million from the State of California, which will expire in 2032. The only periods subject to
examination for the Company’s federal tax returns are the 2007 through 2010 tax years. The periods subject to
examination for the Company’s state tax returns in California and Texas are years 2006 through 2009.
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