American Airlines 2012 Annual Report Download - page 88

Table of Contents
December 31,
2012
2011
Deferred tax assets:
Postretirement benefits other than pensions
$442
$1,075
Rent expense
60
257
Alternative minimum tax credit carryforwards
493
493
Operating loss carryforwards
2,296
2,271
Pensions
2,455
2,337
Frequent flyer obligation
657
680
Gains from lease transactions
5
26
Reorganization items
863
—
Other
963
885
Total deferred tax assets
8,234
8,024
Valuation allowance
(5,084)
(4,802)
Net deferred tax assets
3,150
3,222
Deferred tax liabilities:
Accelerated depreciation and amortization
(2,960)
(3,045)
Other
(190)
(177)
Total deferred tax liabilities
(3,150)
(3,222)
Net deferred tax asset
$ —
$ —
At December 31, 2012, the Company had available for federal income tax purposes an AMT credit carryforward of approximately $493 million, which is
available for an indefinite period, and federal net operating losses of approximately $6.8 billion for regular tax purposes, which will expire, if unused,
beginning in 2022. These net operating losses include an unrealized benefit of approximately $666 million related to the implementation of share-based
compensation accounting guidance that will be recorded in equity when realized. The Company had available for state income tax purposes net operating losses
of $3.1 billion, which expire, if unused, in years 2013 through 2027. The amount that will expire in 2013 is $105 million if not used.
The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. The Company’s 2004 through 2011 tax years are still
subject to examination by the Internal Revenue Service. Various state and foreign jurisdiction tax years remain open to examination and the Company is under
examination, in administrative appeals, or engaged in tax litigation in certain jurisdictions. The Company believes that the effect of any additional
assessment(s) will be immaterial to its consolidated financial statements.
Cash payments (refunds) for income taxes were $5 million, $(0.5) million and $(32) million for 2012, 2011 and 2010, respectively.
Under special tax rules (the Section 382 Limitation), cumulative stock ownership changes among material shareholders exceeding 50 percent during a three
year period can potentially limit a company’s future use of net operating losses and tax credits. Chapter 11 proceedings could impact the availability and
utilization of net operating losses and tax credits. Based on available information, the Company believes it is not currently subject to the Section 382
Limitation.
Under special tax rules (the Section 382 Limitation), cumulative stock ownership changes among material shareholders exceeding 50 percent during a rolling
three year period can potentially limit a company’s future use of net operating losses and tax credits. See discussion under Item 1A, "Risk Factors - Chapter
11 Reorganization Risks" regarding the potential impact of these rules on the company's utilization of its net operating losses.
The Company has an unrecognized tax benefit of approximately $5 million, which did not change during the twelve months ended December 31, 2012.
Changes in the unrecognized tax benefit have no impact on the effective tax rate due to the existence of the valuation allowance. Accrued interest on tax positions
is recorded as a component of interest expense but was not significant at December 31, 2012.
The reconciliation of the beginning and ending amounts of unrecognized tax benefit are (in millions):
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