XO Communications 2009 Annual Report Download - page 72

Components of deferred tax assets and liabilities were as follows (in thousands):
2009 2008
December 31,
Deferred tax assets:
Provisions not currently deductible .......................... $ 71,793 $ 69,266
Property, equipment and other long-term assets (net)............. 334,281 404,853
Net operating loss and capital loss carry forwards ............... 731,228 675,836
Total deferred tax assets.................................. 1,137,302 1,149,955
Valuation allowance ..................................... (1,137,302) (1,149,955)
Net deferred tax assets ................................... — —
Deferred tax liabilities:
Other identifiable intangibles .............................. (6,498) (6,498)
Total deferred tax liabilities ............................... (6,498) (6,498)
Net deferred tax liability ................................. $ (6,498) $ (6,498)
As of December 31, 2009, for federal income tax purposes, the Company had net operating loss carryforwards
of $3.6 billion, of which $1.1 billion related to the acquisition of a business. The acquired net operating loss
carryforwards expire between 2019 and 2023. The remaining net operating loss carryforwards expire between
2022 and 2029. Utilization of the Company’s net operating loss carryforwards is limited under the ownership
change rules of the U.S. Internal Revenue Code. Due to these limitations, the Company reduced its deferred
tax assets related to net operating loss carryforwards. Accordingly, net operating losses for financial statement
purposes have been reduced below the amount available for federal income tax purposes.
For the period January 2003 through January 2004, the Company was a member of an affiliated group of
corporations which filed a consolidated return with Starfire Holding Corporation (“Starfire”), the parent entity
of an affiliated group of corporations controlled by Mr. Carl Icahn. In January 2004, the Company
deconsolidated from Starfire and under a tax allocation agreement, Starfire was required to reimburse the
Company each year going forward for the excess of the Company’s actual income taxes over the income taxes
the Company would have owed if net operating losses or other tax attributes used in prior periods by the
Starfire affiliated group were still available to the Company. The Company entered into a new tax allocation
agreement with Starfire on July 25, 2008. See discussion below. The Company’s net operating loss
carryforward has been reduced by the amount used by Starfire in 2003 and 2004. No amount has been
recorded for potential reimbursement from Starfire under the previous tax allocation agreement. The
Company’s rights to reimbursement from Starfire under the previous tax allocation agreement are preserved
under the new tax allocation agreement.
Income tax (benefit) expense is as follows (in thousands):
2009 2008 2007
Year Ended December 31,
Current income tax (benefit) expense:
State ............................................... $1,191 $(4,013) $1,116
Foreign ............................................. 4 1 4
Total current income tax (benefit) expense.................. 1,195 (4,012) 1,120
Deferred income tax benefit
State ............................................... — — (333)
Total deferred income tax benefit ........................ — — (333)
Total income tax (benefit) expense ......................... $1,195 $(4,012) $ 787
68