GVHR » Topics » Deferred Taxes

These excerpts taken from the GVHR 10-K filed Mar 16, 2009.

Deferred Taxes

 

The Company recognizes deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases of its assets and liabilities. The Company regularly reviews its deferred tax assets for recoverability and, if necessary, establishes a valuation allowance. The Company considers future market growth, forecasted earnings, future taxable income, the mix of earnings in the jurisdictions in which the Company operates, and prudent and feasible tax planning strategies in determining the need for a valuation allowance. The Company calculates the current and deferred tax provision based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed during the subsequent year. Adjustments based on filed returns are recorded when identified, which is generally in the fourth quarter of the subsequent year for U.S. federal and state provisions. If the Company were to operate at a loss or is unable to generate sufficient future taxable income, or if there is a material change in the actual effective tax rates or time period within which the underlying temporary differences become taxable or deductible, then the Company could be required to establish a valuation allowance against all or a significant portion of the deferred tax assets, resulting in a substantial increase in the Company’s effective tax rate. During the year ended December 31, 2007, the Company determined that it is more likely than not that the deferred tax assets related to certain state net operating loss carryforwards will not be realized. As such, at December 31, 2007, the Company established a valuation allowance of $1,304 against those certain state net operating loss carryforwards. This valuation allowance decreased by $367 during 2008 due to differences in the actual generation and utilization of state net operating losses based on the Company’s 2007 tax return filing positions and increased by $116 for additional projected state net operating losses generated in 2008 that are not expected to be realized.  If it is later determined that it is more likely than not that the net deferred tax assets would be realized, the applicable portion of the previously provided valuation allowance will be reversed.

 

The Company adopted the provisions of Financial Accounting Standards Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income TaxesAn Interpretation of FASB Statement No. 109 (“FIN 48”), on January 1, 2007. FIN 48 clarifies the accounting for uncertainty in tax positions and requires companies to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. It also provides guidance on the recognition, measurement and classification of income tax uncertainties, along with any related interest and penalties. As of December 31, 2008, the Company has recorded $9.8 million (including interest) of unrecognized tax benefits ($2.1 million relating to the methodology used to determine state apportionment of income and $7.7 million related to a proposed IRS adjustment identified during the current IRS examination).

 

48



Table of Contents

 

On March 11, 2009, in connection with an ongoing examination of the Company’s U.S. income tax returns for 2002 through 2004, the Company received Notices of Proposed Adjustment from the Internal Revenue Service (“IRS”) advising it of proposed increases to its federal income tax of approximately $41.9 million including penalties. Of this amount, the Company has previously reserved $6.9 million of federal income taxes in its consolidated financial statements in accordance with the provisions of FIN 48.  The Company believes that the remaining proposed adjustments are either the result of the IRS misunderstanding the facts relating to the adjustments or the result of a legal interpretation made by the IRS that is inconsistent with existing law.  The Company intends to vigorously contest these adjustments and believes that it will ultimately prevail.  Although the ultimate outcome of the dispute with the IRS cannot be predicted with certainty, the Company believes that adequate provision for taxes has been made in its consolidated financial statements for any reasonably foreseeable outcome related to these proposed adjustments.   Consequently, the Company believes that ultimate resolution of this matter is unlikely to have a material adverse effect on its financial condition or results of operations.

 

Deferred
Taxes



 



The Company
recognizes deferred tax assets and liabilities based on the differences between
the financial statement carrying amounts and the tax bases of its assets and
liabilities. The Company regularly reviews its deferred tax assets for
recoverability and, if necessary, establishes a valuation allowance. The
Company considers future market growth, forecasted earnings, future taxable
income, the mix of earnings in the jurisdictions in which the Company operates,
and prudent and feasible tax planning strategies in determining the need for a
valuation allowance. The Company calculates the current and deferred tax
provision based on estimates and assumptions that could differ from the actual
results reflected in income tax returns filed during the subsequent year.
Adjustments based on filed returns are recorded when identified, which is
generally in the fourth quarter of the subsequent year for U.S. federal and
state provisions. If the Company were to operate at a loss or is unable to
generate sufficient future taxable income, or if there is a material change in
the actual effective tax rates or time period within which the underlying
temporary differences become taxable or deductible, then the Company could be
required to establish a valuation allowance against all or a significant
portion of the deferred tax assets, resulting in a substantial increase in the
Company’s effective tax rate. During the year ended December 31, 2007, the
Company determined that it is more likely than not that the deferred tax assets
related to certain state net operating loss carryforwards will not be realized.
As such, at December 31, 2007, the Company established a valuation
allowance of $1,304 against those certain state net operating loss
carryforwards. This valuation allowance decreased by $367 during 2008 due to
differences in the actual generation and utilization of state net operating
losses based on the Company’s 2007 tax return filing positions and increased by
$116 for additional projected state net operating losses generated in 2008 that
are not expected to be realized.  If it
is later determined that it is more likely than not that the net deferred tax
assets would be realized, the applicable portion of the previously provided
valuation allowance will be reversed.



 



The Company adopted the provisions of Financial
Accounting Standards Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income Taxes
An Interpretation of FASB Statement No. 109
(“FIN 48”), on January 1, 2007. FIN 48 clarifies the accounting
for uncertainty in tax positions and requires companies to determine whether it
is “more likely than not” that a tax position will be sustained upon
examination by the appropriate taxing authorities before any part of the
benefit can be recorded in the financial statements. It also provides guidance
on the recognition, measurement and classification of income tax uncertainties,
along with any related interest and penalties. As of December 31, 2008,
the Company has recorded $9.8 million (including interest) of unrecognized tax
benefits ($2.1 million relating to the methodology used to determine state
apportionment of income and $7.7 million related to a proposed IRS adjustment
identified during the current IRS examination).



 



48
















Table
of Contents



 



On March 11, 2009, in connection with an ongoing
examination of the Company’s U.S. income tax returns for 2002 through 2004, the
Company received Notices of Proposed Adjustment from the Internal Revenue
Service (“IRS”) advising it of proposed increases to its federal income tax of
approximately $41.9 million including penalties. Of this amount, the
Company has previously reserved $6.9 million of federal income taxes in its
consolidated financial statements in accordance with the provisions of FIN
48.  The Company believes that the
remaining proposed adjustments are either the result of the IRS
misunderstanding the facts relating to the adjustments or the result of a legal
interpretation made by the IRS that is inconsistent with existing law.  The Company intends to vigorously contest
these adjustments and believes that it will ultimately prevail.  Although the ultimate outcome of the dispute
with the IRS cannot be predicted with certainty, the Company believes that
adequate provision for taxes has been made in its consolidated financial
statements for any reasonably foreseeable outcome related to these proposed
adjustments.   Consequently, the Company
believes that ultimate resolution of this matter is unlikely to have a material
adverse effect on its financial condition or results of operations.



 



Deferred
Taxes



 



The Company
recognizes deferred tax assets and liabilities based on the differences between
the financial statement carrying amounts and the tax bases of its assets and
liabilities. The Company regularly reviews its deferred tax assets for
recoverability and, if necessary, establishes a valuation allowance. The
Company considers future market growth, forecasted earnings, future taxable
income, the mix of earnings in the jurisdictions in which the Company operates,
and prudent and feasible tax planning strategies in determining the need for a
valuation allowance. The Company calculates the current and deferred tax
provision based on estimates and assumptions that could differ from the actual
results reflected in income tax returns filed during the subsequent year.
Adjustments based on filed returns are recorded when identified, which is
generally in the fourth quarter of the subsequent year for U.S. federal and
state provisions. If the Company were to operate at a loss or is unable to
generate sufficient future taxable income, or if there is a material change in
the actual effective tax rates or time period within which the underlying
temporary differences become taxable or deductible, then the Company could be
required to establish a valuation allowance against all or a significant
portion of the deferred tax assets, resulting in a substantial increase in the
Company’s effective tax rate. During the year ended December 31, 2007, the
Company determined that it is more likely than not that the deferred tax assets
related to certain state net operating loss carryforwards will not be realized.
As such, at December 31, 2007, the Company established a valuation
allowance of $1,304 against those certain state net operating loss
carryforwards. This valuation allowance decreased by $367 during 2008 due to
differences in the actual generation and utilization of state net operating
losses based on the Company’s 2007 tax return filing positions and increased by
$116 for additional projected state net operating losses generated in 2008 that
are not expected to be realized.  If it
is later determined that it is more likely than not that the net deferred tax
assets would be realized, the applicable portion of the previously provided
valuation allowance will be reversed.



 



The Company adopted the provisions of Financial
Accounting Standards Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income Taxes
An Interpretation of FASB Statement No. 109
(“FIN 48”), on January 1, 2007. FIN 48 clarifies the accounting
for uncertainty in tax positions and requires companies to determine whether it
is “more likely than not” that a tax position will be sustained upon
examination by the appropriate taxing authorities before any part of the
benefit can be recorded in the financial statements. It also provides guidance
on the recognition, measurement and classification of income tax uncertainties,
along with any related interest and penalties. As of December 31, 2008,
the Company has recorded $9.8 million (including interest) of unrecognized tax
benefits ($2.1 million relating to the methodology used to determine state
apportionment of income and $7.7 million related to a proposed IRS adjustment
identified during the current IRS examination).



 



48
















Table
of Contents



 



On March 11, 2009, in connection with an ongoing
examination of the Company’s U.S. income tax returns for 2002 through 2004, the
Company received Notices of Proposed Adjustment from the Internal Revenue
Service (“IRS”) advising it of proposed increases to its federal income tax of
approximately $41.9 million including penalties. Of this amount, the
Company has previously reserved $6.9 million of federal income taxes in its
consolidated financial statements in accordance with the provisions of FIN
48.  The Company believes that the
remaining proposed adjustments are either the result of the IRS
misunderstanding the facts relating to the adjustments or the result of a legal
interpretation made by the IRS that is inconsistent with existing law.  The Company intends to vigorously contest
these adjustments and believes that it will ultimately prevail.  Although the ultimate outcome of the dispute
with the IRS cannot be predicted with certainty, the Company believes that
adequate provision for taxes has been made in its consolidated financial
statements for any reasonably foreseeable outcome related to these proposed
adjustments.   Consequently, the Company
believes that ultimate resolution of this matter is unlikely to have a material
adverse effect on its financial condition or results of operations.



 



These excerpts taken from the GVHR 10-K filed Mar 17, 2008.

Deferred Taxes

        The Company recognizes deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases of its assets and liabilities. The Company regularly reviews its deferred tax assets for recoverability and, if necessary, establishes a valuation allowance. The Company considers future market growth, forecasted earnings, future taxable income, the mix of earnings in the jurisdictions in which the Company operates, and prudent and feasible tax planning strategies in determining the need for a valuation allowance. The Company calculates the current and deferred tax provision based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed during the subsequent year. Adjustments based on filed returns are recorded when identified, which is generally in the fourth quarter of the subsequent year for U.S. federal and state provisions. If the Company were to operate at a loss or is unable to generate sufficient future taxable income, or if there is a material change in the actual effective tax rates or time period within which the underlying temporary differences become taxable or deductible, then the Company could be required to establish a valuation allowance against all or a significant portion of the deferred tax assets, resulting in a substantial increase in the Company's effective tax rate. During the year ended December 31, 2007, the Company determined that it is more likely than not that the deferred tax assets related to certain state net operating loss carryforwards will not be realized. As such, at December 31, 2007 the Company established a valuation allowance of $1,304 against those certain state net operating loss carryforwards. If it is later determined that it is more likely than not that the net deferred tax assets would be realized, the applicable portion of the previously provided valuation allowance will be reversed.

        The Company adopted the provisions of Financial Accounting Standards Board ("FASB") Interpretation No. 48, Accounting for Uncertainty in Income TaxesAn Interpretation of FASB Statement No. 109 ("FIN 48"), on January 1, 2007. FIN 48 clarifies the accounting for uncertainty in tax positions and requires companies to determine whether it is "more likely than not" that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. It also provides guidance on the recognition, measurement and classification of income tax uncertainties, along with any related interest and penalties. The disclosure requirements and cumulative effect of adoption of FIN 48 are presented in Note 18 to the consolidated financial statements beginning on page F-1.

Deferred Taxes



        The Company recognizes deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases of its
assets and liabilities. The Company regularly reviews its deferred tax assets for recoverability and, if necessary, establishes a valuation allowance. The Company considers future market growth,
forecasted earnings, future taxable income, the mix of earnings in the jurisdictions in which the Company operates, and prudent and feasible tax planning strategies in determining the need for a
valuation allowance. The Company calculates the current and deferred tax provision based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed
during the subsequent year. Adjustments based on filed returns are recorded when identified, which is generally in the fourth quarter of the subsequent year for U.S. federal and state provisions. If
the Company were to operate at a loss or is unable to generate sufficient future taxable income, or if there is a material change in the actual effective tax rates or time period within which the
underlying temporary differences become taxable or deductible, then the Company could be required to establish a valuation allowance against all or a significant portion of the deferred tax assets,
resulting in a substantial increase in the Company's effective tax rate. During the year ended December 31, 2007, the Company determined that it is more likely than not that the deferred tax
assets related to certain state net operating loss carryforwards will not be realized. As such, at December 31, 2007 the Company established a valuation allowance of $1,304 against those
certain state net operating loss carryforwards. If it is later determined that it is more likely than not that the net deferred tax assets would be realized, the applicable portion of the previously
provided valuation allowance will be reversed.



        The
Company adopted the provisions of Financial Accounting Standards Board ("FASB") Interpretation No. 48,
Accounting for Uncertainty in Income
Taxes
An Interpretation of FASB Statement No. 109 ("FIN 48"), on January 1, 2007. FIN 48
clarifies the accounting for uncertainty in tax positions and requires companies to determine whether it is "more likely than not" that a tax position will be sustained upon examination by the
appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. It also provides guidance on the recognition, measurement and classification of income tax
uncertainties, along with any related interest and penalties. The disclosure requirements and cumulative effect of adoption of FIN 48 are presented in Note 18 to the consolidated
financial statements beginning on page F-1.



This excerpt taken from the GVHR 10-K filed Mar 16, 2007.
Deferred Taxes
 
The Company recognizes deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases of its assets and liabilities. The Company regularly reviews its deferred tax assets for recoverability and, if necessary, establishes a valuation allowance based on historical taxable income, projected future taxable income, and the expected timing of the reversals of existing temporary differences. If the Company were to operate at a loss or is unable to generate sufficient future taxable income, or if there is a material change in the actual effective tax rates or time period within which the underlying temporary differences become taxable or deductible, then the Company could be required to establish a valuation allowance against all or a significant portion of the deferred tax assets, resulting in a substantial increase in the Company’s effective tax rate.
 
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