Windstream 2013 Annual Report Download - page 212

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-76
12. Income Taxes, Continued:
The significant components of the net deferred income tax liability (asset) were as follows at December 31:
(Millions) 2013 2012
Property, plant and equipment $ 1,278.4 $ 1,292.7
Goodwill and other intangible assets 1,322.5 1,345.8
Operating loss and credit carryforward (677.8)(711.6)
Postretirement and other employee benefits (108.6)(168.8)
Unrealized holding loss and interest swaps (1.4)(27.6)
Deferred compensation (5.2)(6.3)
Bad debt (30.3)(40.9)
Deferred debt costs (17.7)(46.8)
Restricted stock (12.1)(11.1)
Other, net (35.9)(63.9)
1,711.9 1,561.5
Valuation allowance 84.9 85.9
Deferred income taxes, net $ 1,796.8 $ 1,647.4
Deferred tax assets $ (930.8) $ (1,193.7)
Deferred tax liabilities 2,727.6 2,841.1
Deferred income taxes, net $ 1,796.8 $ 1,647.4
At December 31, 2013 and 2012, we had federal net operating loss carryforwards of approximately $1,545.6 million and
$1,660.0 million, respectively, which expire in varying amounts from 2021 through 2031. The loss carryforwards at
December 31, 2013 were primarily losses acquired in conjunction with our mergers with Valor Communications Group, Inc.
("Valor"), NuVox, Iowa Telecom and PAETEC. The 2013 decrease is primarily associated with the amount utilized for the year.
At December 31, 2013 and 2012, we had state net operating loss carryforwards of approximately $2,001.2 million and $2,116.4
million, respectively, which expire annually in varying amounts from 2014 through 2032. The loss carryforwards at
December 31, 2013 were primarily losses acquired in conjunction with our mergers with Valor, CTC, D&E, Lexcom Inc.
("Lexcom"), NuVox, Iowa Telecom, Q-Comm and PAETEC. The 2013 decrease is primarily associated with the amount
utilized for the year. Federal and state tax rules limit the deductibility of loss carryforwards in years following an ownership
change. As a result of these limitations or the expected lack of sufficient future taxable income, we believe that it is more likely
than not that the benefit from certain federal and state loss carryforwards will not be realized prior to their expiration. We
establish valuation allowances when necessary to reduce deferred tax assets to amounts expected to be realized. Therefore, as
of December 31, 2013 and 2012, we recorded valuation allowances of $84.9 million and $85.9 million, respectively, related to
federal and state loss carryforwards which are expected to expire before they are utilized. The amount of state tax credit
carryforward at December 31, 2013 and 2012, was approximately $22.2 million and $20.4 million, respectively, which expire
in varying amounts from 2014 through 2027.
We account for uncertainty in taxes in accordance with authoritative guidance. A reconciliation of the unrecognized tax benefits
is as follows:
(Millions) 2013 2012 2011
Beginning balance $ 18.3 $ 18.8 $ 18.6
Additions based on PAETEC acquisition — — 0.5
Additions based on Q-Comm acquisition — — 0.6
Additions based on tax positions related to current year 2.7 — —
Additions based on tax positions of prior years 0.7 — —
Reductions for tax positions of prior years (0.2)(0.5) —
Reduction as a result of a lapse of the applicable statute of
limitations (16.9) — (0.9)
Ending balance $ 4.6 $ 18.3 $ 18.8