Southwest Airlines 2012 Annual Report Download - page 124
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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, 2012 and 2011, are as follows:
(in millions) 2012 2011
DEFERRED TAX LIABILITIES:
Accelerated depreciation ........................................... $ 3,812 $ 3,537
Fuel derivative instruments ......................................... 33 —
Other ........................................................... 70 84
Total deferred tax liabilities ....................................... 3,915 3,621
DEFERRED TAX ASSETS:
Fuel derivative instruments ......................................... 40 155
Deferred gains from sale and leaseback of aircraft ....................... 24 44
Capital and operating leases ......................................... 179 141
Accrued engine maintenance ........................................ 84 43
Accrued employee benefits ......................................... 281 267
State taxes ....................................................... 77 78
Business partner income ............................................ 339 207
Net operating losses and credit carrybacks ............................. 83 212
Other ........................................................... 170 171
Total deferred tax assets .......................................... 1,277 1,318
Net deferred tax liability .......................................... $ 2,638 $ 2,303
The provision for income taxes is composed of the following:
(in millions) 2012 2011 2010
CURRENT:
Federal ............................................ $ (45) $ 4 $ 198
State .............................................. 12 13 19
Total current ...................................... (33) 17 217
DEFERRED:
Federal ............................................ 287 122 61
State .............................................. 10 6 8
Total deferred ..................................... 297 128 69
$ 264 $ 145 $ 286
The effective tax rate on income before income taxes differed from the federal income tax statutory rate for
the following reasons:
(in millions) 2012 2011 2010
Tax at statutory
U.S. tax rates ....................................... $ 240 $ 114 $ 261
Nondeductible items ................................... 10 13 8
State income taxes, net of federal benefit ................... 14 13 18
Other, net ............................................ — 5 (1)
Total income tax provision ............................ $ 264 $ 145 $ 286
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