Waste Management 2011 Annual Report Download - page 182

WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Deferred Tax Assets (Liabilities)
The components of the net deferred tax assets (liabilities) at December 31 are as follows (in millions):
December 31,
2011 2010
Deferred tax assets:
Net operating loss, capital loss and tax credit carry-forwards ................ $ 231 $ 179
Landfill and environmental remediation liabilities ........................ 95 60
Miscellaneous and other reserves ...................................... 283 202
Subtotal ........................................................ 609 441
Valuation allowance ................................................ (156) (132)
Deferred tax liabilities:
Property and equipment ........................................... (1,282) (1,045)
Goodwill and other intangibles ..................................... (976) (886)
Net deferred tax liabilities ....................................... $(1,805) $(1,622)
The valuation allowance increased by $24 million in 2011 due to our acquisition of Oakleaf, changes in our
capital loss carry-forward and changes in our state NOL and credit carry-forwards.
At December 31, 2011, we had $120 million of federal net operating loss, or NOL, carry-forwards and
$1.4 billion of state NOL carry-forwards. The federal and state NOL carry-forwards have expiration dates
through the year 2031. We also have a $104 million capital loss carry-forward that expires in 2014. In addition,
we have $39 million of state tax credit carry-forwards at December 31, 2011.
We have established valuation allowances for uncertainties in realizing the benefit of certain tax loss and
credit carry-forwards and other deferred tax assets. While we expect to realize the deferred tax assets, net of the
valuation allowances, changes in estimates of future taxable income or in tax laws may alter this expectation.
Liabilities for Uncertain Tax Positions
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, including accrued
interest for 2011, 2010 and 2009 is as follows (in millions):
2011 2010 2009
Balance at January 1 .............................................. $53 $75 $84
Additions based on tax positions related to the current year .............956
Additions based on tax positions of prior years .......................———
Additions due to acquisitions ..................................... 2 — —
Accrued interest ................................................234
Reductions for tax positions of prior years ........................... — (1) (1)
Settlements ................................................... (10) (23) (10)
Lapse of statute of limitations ..................................... (7) (6) (8)
Balance at December 31 ........................................... $49 $53 $75
These liabilities are primarily included as a component of long-term “Other liabilities” in our Consolidated
Balance Sheets because the Company generally does not anticipate that settlement of the liabilities will require
payment of cash within the next twelve months. As of December 31, 2011, $32 million of net unrecognized tax
benefits, if recognized in future periods, would impact our effective tax rate.
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