Waste Management 2014 Annual Report Download - page 183

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,
2014 2013
Deferred tax assets:
Net operating loss, capital loss and tax credit carry-
forwards ................................... $ 297 $ 164
Miscellaneous and other reserves, net .............. 380 356
Subtotal .................................. 677 520
Valuation allowance ................................ (300) (149)
Deferred tax liabilities:
Landfill and environmental remediation liabilities .... (22) (30)
Property and equipment ......................... (598) (966)
Goodwill and other intangibles ................... (1,095) (1,104)
Net deferred tax liabilities ................... $(1,338) $(1,729)
The valuation allowance increased by $151 million in 2014 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, 2014, we had $28 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 2034. We also
have $519 million of federal capital loss carry-forwards which expire in 2019. In addition, we have $33 million
of state tax credit carry-forwards at December 31, 2014.
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 2014, 2013 and 2012 is as follows (in millions):
2014 2013 2012
Balance at January 1 ..................................... $ 49 $ 54 $ 49
Additions based on tax positions related to the current year . . 9 6 15
Additions based on tax positions of prior years ............ 2 — —
Additions due to acquisitions .......................... — — —
Accrued interest .....................................122
Reductions based on tax positions related to the current
year ............................................ — — —
Reductions for tax positions of prior years ................ — (7) (1)
Settlements ........................................ (11) (1) (4)
Lapse of statute of limitations .......................... (8) (5) (7)
Balance at December 31 .................................. $ 42 $ 49 $ 54
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