Waste Management 2013 Annual Report Download - page 200

WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Deferred Tax Assets (Liabilities)
The components of net deferred tax assets (liabilities) are as follows (in millions):
December 31,
2013 2012
Deferred tax assets:
Net operating loss, capital loss and tax credit carry-forwards ................ $ 164 $ 189
Miscellaneous and other reserves, net .................................. 356 301
Subtotal ...................................................... 520 490
Valuation allowance ................................................ (149) (120)
Deferred tax liabilities:
Landfill and environmental remediation liabilities ...................... (30) (11)
Property and equipment ........................................... (966) (1,180)
Goodwill and other intangibles ..................................... (1,104) (1,050)
Net deferred tax liabilities ....................................... $(1,729) $(1,871)
The valuation allowance increased by $29 million in 2013 due to changes in our capital loss carry-forwards
and in our state NOL and tax credit carry-forwards, as well as the tax impacts of impairments.
At December 31, 2013, we had $59 million of federal NOL carry-forwards and $1.6 billion of state NOL
carry-forwards. The federal and state NOL carry-forwards have expiration dates through the year 2033. We also
have $101 million of federal capital loss carry-forwards, of which $98 million expire in 2014 and $3 million
expire in 2018. In addition, we have $38 million of state tax credit carry-forwards at December 31, 2013.
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 2013, 2012 and 2011 is as follows (in millions):
2013 2012 2011
Balance at January 1 ............................................... $54 $49 $53
Additions based on tax positions related to the current year .............. 6 15 9
Additions based on tax positions of prior years ........................ — — —
Additions due to acquisitions ...................................... — — 2
Accrued interest ................................................ 2 2 2
Reductions for tax positions of prior years ............................ (7) (1) —
Settlements .................................................... (1) (4) (10)
Lapse of statute of limitations ...................................... (5) (7) (7)
Balance at December 31 ............................................ $49 $54 $49
These liabilities are included as a component of long-term “Other liabilities” in our Consolidated Balance
Sheets because the Company does not anticipate that settlement of the liabilities will require payment of cash
within the next 12 months. As of December 31, 2013, $32 million of net unrecognized tax benefits, if recognized
in future periods, would impact our effective tax rate.
110