Southwest Airlines 2013 Annual Report Download - page 125
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The effective tax rate on income before income taxes differed from the federal income tax statutory rate for
the following reasons:
(in millions) 2013 2012 2011
Tax at statutory U.S. tax rates ..................... $ 423 $ 240 $ 114
Nondeductible items .............................. 10 10 13
State income taxes, net of federal benefit ................... 25 14 13
Other, net ............................................ (3) — 5
Total income tax provision ....................... $ 455 $ 264 $ 145
During 2013, the Company continues to maintain and did not adjust, a $5 million liability for unrecognized
tax benefits, the majority of which related to AirTran’s tax positions in prior years.
As of December 31, 2013, the Company had net operating loss (“NOL”) carryforwards of approximately
$34 million from its federal tax return. These NOL’s are available to offset future taxable income. At a 35
percent federal statutory tax rate, these NOL’s result in a deferred tax asset of $12 million, as of December 31,
2013, which represents the expected future tax benefit of the NOL’s, and which is netted against the Company’s
Deferred income tax liability in the Consolidated Balance Sheet. These NOL’s will expire from 2017 to 2031 if
not utilized. No valuation allowance was necessary. See Note 2 for further information on the acquisition of
AirTran. The only periods subject to examination for the Company’s federal tax return are the 2012 and 2013 tax
years.
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