XO Communications 2010 Annual Report Download - page 75

Download and view the complete annual report

Please find page 75 of the 2010 XO Communications annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 96

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96

XO Holdings, Inc.
Notes to Consolidated Financial Statements
14. INCOME TAXES − (continued)
Income tax (benefit) expense is as follows (in thousands):
Year ended December 31,
2010 2009 2008
Current income tax (benefit) expense:
State ................................. $(195) $1,191 $(4,013)
Foreign................................ 4 4 1
Total current income tax (benefit) expense ...... (191) 1,195 (4,012)
Deferred income tax benefit
State ................................. — — —
Total deferred income tax benefit ............ — — —
Total income tax (benefit) expense ............... $(191) $1,195 $(4,012)
Current income tax benefit for the year ended December 31, 2010 primarily consists of the reversal of
certain state accrued liabilities upon the expiration of the state statute of limitations, partially offset by state
taxes computed based on modified gross receipts or gross margin but designated as income tax by the FASB
due to the various components of the calculation.
Reconciliation of the U.S. federal and state tax rate to the Company’s effective income tax rate:
2010 2009 2008
Statutory U.S. federal rate..................... 35.0% 35.0% 35.0%
State income taxes, net of federal benefit .......... 1.8 9.0 4.0
Adjustments to Federal and State net operating loss . . . 3,298.9 3.0 —
Other................................... (4.5) 2.4 (0.6)
Subtotal ............................... 3,331.2 49.4 38.4
Valuation allowance for deferred tax assets ......... (3,329.6) (44.4) (33.3)
Effective income tax rate ..................... 1.6% 5.0% 5.1%
The effective tax rate was increased in the current year due to the reversal of uncertain tax positions and
expiring state net operating losses and in the prior year by expiring state net operating losses and is reflected
as Adjustments to Federal and State net operating loss. The prior year impact of expiring state net operating
losses has been expanded as a separate component to be consistent with the current year presentation. These
adjustments had no overall impact on the effective tax rate due to the increase in the valuation allowance as a
percentage of pretax earnings.
Reconciliation of Unrecognized Tax Benefits (in thousands):
Gross unrecognized tax benefits at January 1, 2010 ....................... $423,298
Gross amount of decreases from tax positions − prior period ................. (422,464)
Decreases resulting from expiration of statutes of limitation.................. (834)
Gross unrecognized tax benefits at December 31, 2010 ..................... $ —
As of December 31, 2010, the Company’s had no unrecognized tax benefits.
Interest and Penalties
The table below sets forth accrued interest (in thousands):
Accrued interest as of January 1, 2010 ................................ $381
Decrease to accrued interest ....................................... (381)
Accrued interest as of December 31, 2010 ............................. $ —
71