PCR » Topics » Income Taxes:

This excerpt taken from the PCR 10-K filed Feb 27, 2009.

(h) Income Taxes

Deferred income tax assets and liabilities are recognized for the effects of temporary differences between the financial statement carrying amounts and the income tax basis of assets and liabilities using tax rates expected to be in effect when such differences reverse. In addition, future tax benefits, such as non-deductible accrued expenses, are recognized to the extent such benefits are more likely than not to be realized as an economic benefit in the form of a reduction of income taxes in future years.

 

The Financial Accounting Standards Board (“FASB”) issued Financial Accounting Standards Interpretation No. 48,Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 prescribes a recognition threshold and measurement process for recording in the financial statements uncertain tax positions taken or expected to be taken in a tax return. FIN 48 also provides guidance on recognition, derecognition, classification, interest and penalties, accounting in interim periods, disclosures and transitions. The Company adopted the provisions of FIN 48 as of January 1, 2007, as required. There was no impact on total liabilities or stockholders’ equity as a result of the adoption of FIN 48. The Company recognizes interest and penalties related to uncertain tax positions as a component of the income tax provision.

 

These excerpts taken from the PCR 8-K filed Oct 15, 2008.

Income Taxes:

The Company accounts for income taxes in accordance with FASB Statement No. 109, Accounting for Income Taxes, which requires the use of an asset and liability method of accounting for income taxes. Deferred income taxes are provided to reflect the tax effect of differences between the financial statement carrying amounts and the tax bases of assets and liabilities. The Company elected to be treated as an S corporation effective January 1, 1996. As a result, taxable income, loss and credits flow directly to the shareholder and tax-related assets and liabilities of the Company become the obligation of the shareholder of the S corporation and are no longer reflected in the financial statements. The deferred tax assets, liabilities, and provision reflected in the financial statements are those that do not flow through to the shareholder, as they relate to taxable subsidiaries.

In July 2006, the FASB issued FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109. FIN No. 48 increases the relevancy and comparability of financial reporting by clarifying the way companies account for uncertainty in measuring income taxes. FIN No. 48 prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. FIN No. 48 only allows a favorable tax position to be included in the calculation of tax liabilities and expenses if a company concludes that it is more likely than not that its adopted tax position will prevail if challenged by tax authorities. FIN No. 48 also provides guidance on the accounting for and recording of interest and penalties on uncertain tax positions. The Company adopted FIN No. 48 on January 1, 2007, and the adoption of FIN No. 48 did not have an impact on the financial condition and results of operations.

Income Taxes:

The Company accounts for income taxes in accordance with FASB Statement No. 109, Accounting for Income Taxes, which requires the use of an asset and liability method of accounting for income taxes. Deferred income taxes are provided to reflect the tax effect of differences between the financial statement carrying amounts and the tax bases of assets and liabilities. The Company elected to be treated as an S corporation effective January 1, 1996. As a result, taxable income, loss and credits flow directly to the shareholder and tax-related assets and liabilities of the Company become the obligation of the shareholder of the S corporation and are no longer reflected in the consolidated financial statements. The deferred tax assets, liabilities, and provision reflected in the consolidated financial statements are those that do not flow through to the shareholder, as they relate to taxable subsidiaries.

 

12


TUTOR-SALIBA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2007 and 2006 and for each of the three years in the period ended December 31, 2007

1. SIGNIFICANT ACCOUNTING POLICIES, Continued

 

In July 2006, the FASB issued FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109. FIN No. 48 increases the relevancy and comparability of financial reporting by clarifying the way companies account for uncertainty in measuring income taxes. FIN No. 48 prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. FIN No. 48 only allows a favorable tax position to be included in the calculation of tax liabilities and expenses if a company concludes that it is more likely than not that its adopted tax position will prevail if challenged by tax authorities. FIN No. 48 also provides guidance on the accounting for and recording of interest and penalties on uncertain tax positions. The Company adopted FIN No. 48 on January 1, 2007, and the adoption of FIN No. 48 did not have an impact on the financial condition and results of operations.

These excerpts taken from the PCR 10-K filed Feb 28, 2008.

(h) Income Taxes

The Company accounts for income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes". (See Note 5). Deferred income tax assets and liabilities are recognized for the effects of temporary differences between the financial statement carrying amounts and the income tax basis of assets and liabilities using tax rates expected to be in effect when such differences reverse. In addition, future tax benefits, such as non-deductible accrued expenses, are recognized to the extent such benefits are more likely than not to be realized as an economic benefit in the form of a reduction of income taxes in future years.

 

In June 2006, the FASB issued Financial Accounting Standards Interpretation No. 48,Accounting for Uncertainty in Income Taxes” (“FIN 48”), an interpretation of SFAS No. 109. FIN 48 prescribes a recognition threshold and measurement process for recording in the financial statements uncertain tax positions taken or expected to be taken in a tax return. FIN 48 also provides guidance on recognition, classification, interest and penalties, accounting in interim periods, disclosures and transitions. The Company adopted the provisions of FIN 48 as of January 1, 2007, as required. There was no impact on total liabilities or stockholders’ equity as a result of the adoption of FIN 48.

 

 

57

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2007, 2006 and 2005 (continued)

 

[1] Summary of Significant Accounting Policies (continued)

 

(h) Income Taxes



The Company accounts for income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes". (See Note 5). Deferred income tax assets and liabilities are recognized for the effects of temporary differences between the financial statement carrying amounts and the income tax basis of assets and liabilities using tax rates expected to be in effect when such differences reverse. In addition, future tax benefits, such as non-deductible accrued expenses, are recognized to the extent such benefits are more likely than not to be realized as an economic benefit in the form of a reduction of income taxes in future years.



 



In June 2006, the FASB issued Financial Accounting Standards Interpretation No. 48,Accounting for Uncertainty in Income Taxes” (“FIN 48”), an interpretation of SFAS No. 109. FIN 48 prescribes a recognition threshold and measurement process for recording in the financial statements uncertain tax positions taken or expected to be taken in a tax return. FIN 48 also provides guidance on recognition, classification, interest and penalties, accounting in interim periods, disclosures and transitions. The Company adopted the provisions of FIN 48 as of January 1, 2007, as required. There was no impact on total liabilities or stockholders’ equity as a result of the adoption of FIN 48.



 



 



57






NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



For the Years Ended December 31, 2007, 2006 and 2005 (continued)



 




[1] Summary of Significant Accounting Policies (continued)



 



This excerpt taken from the PCR 10-K filed Mar 10, 2006.

[5] Income Taxes

The (provision) credit for income taxes is comprised of the following (in thousands):

                          Federal        State         Total
                        -----------  -------------  ------------

2005
----
  Current                 $ (1,417)      $ (3,594)     $ (5,011)
  Deferred                    (781)         2,920         2,139
                        -----------  -------------  ------------
                          $ (2,198)      $   (674)     $ (2,872)
                        ===========  =============  ============
2004
----
  Current                 $   (360)      $   (650)     $ (1,010)
  Deferred                  (7,654)          (255)       (7,909)
                        -----------  -------------  ------------
                          $ (8,014)      $   (905)     $ (8,919)
                        ===========  =============  ============
2003
----
  Current                 $   (529)      $ (1,380)     $ (1,909)
  Deferred                  16,023         (1,018)       15,005
                        -----------  -------------  ------------
                          $ 15,494       $ (2,398)     $ 13,096
                        ===========  =============  ============

The table below reconciles the difference between the statutory federal income tax rate and the effective rate provided for income before income taxes in the consolidated statements of income.

72


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003 (continued)

[5] Income Taxes (continued)

                                                      2005          2004           2003
                                                  -------------  ------------  -------------

Statutory federal income tax rate                     35%            35%           35%
State income taxes, net of federal tax benefit         -              2             3
Recognition of current year tax benefit                -              -           (35)
Secondary offering costs                               3              -             -
Reversal of valuation allowance                        -            (18)          (45)
Officer's compensation                                 5              -             -
Other                                                 (1)             1             -
                                                  -------------  ------------  -------------
Effective tax rate                                    42%            20%          (42)%
                                                  =============  ============  =============

The following is a summary of the significant components of the Company's deferred tax assets and liabilities as of December 31, 2005 and 2004 (in thousands):

                                                            2005           2004
                                                         ------------   ------------
Deferred Tax Assets
Contract losses                                            $  16,156      $       -
Timing of expense recognition                                 11,143         12,161
Net operating loss carryforwards                                 490         19,969
Alternative minimum tax credit carryforwards                   4,265          3,777
Other, net                                                       361             50
                                                         ------------   ------------
                                                           $  32,415      $  35,957
Valuation allowance for deferred tax assets                     (490)          (490)
                                                         ------------   ------------
  Deferred tax assets                                      $  31,925      $  35,467
                                                         ------------   ------------

Deferred Tax Liabilities
Joint ventures - construction                              $  (6,858)     $ (18,576)
Fixed assets, due primarily to purchase accounting            (8,546)             -
Intangible assets, due primarily to purchase accounting       (2,903)             -
Other                                                           (683)          (129)
                                                         ------------   ------------
  Deferred tax liabilities                                 $ (18,990)     $ (18,705)
                                                         ------------   ------------

  Net deferred tax asset                                   $  12,935      $  16,762
                                                         ============   ============
The net deferred asset as of December 31, 2005 is classified in the Consolidated Balance Sheets based on when the future benefit is expected to be realized as follows (in thousands):
             Short-term "Deferred tax asset"     $ 12,888
             Long-term "Deferred tax asset"            47
                                                -------------
                                                 $ 12,935
                                                =============
A valuation allowance is provided to reduce the deferred tax assets to a level which, more likely than not, will be realized. The ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible. The net deferred tax assets reflect

73


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003 (continued)

[5] Income Taxes (continued)

management's estimate of the amount which would, more likely than not, be realized from future taxable income.

As a result of not providing federal income tax benefit applicable to losses recorded in certain prior years for financial reporting purposes, benefit from these losses was realized in 2004 and 2003 by not having to provide federal income tax of approximately $7.9 million and $11.0 million, respectively. In addition, during the year ended December 31, 2003, the Company recognized an additional $14.9 million tax benefit based on expected utilization of net operating loss carryforwards.

At December 31, 2005, the Company has unused net operating loss carryforwards for tax reporting purposes of approximately $1.4 million which expire during the 2006 - 2007 period. At December 31, 2005, the Company also has unused alternative minimum tax credit carryforwards for income tax reporting purposes of approximately $4.3 million that have no expiration date.

The Company has evaluated the available evidence about both asserted and unasserted income tax contingencies in its income tax returns filed with the Internal Revenue Service, state, local and foreign tax authorities. The Company has recorded $1.7 million for income tax contingencies which represents its estimate of the amount that is probable and estimable of being payable, if successfully challenged by such tax authorities, under the provisions of SFAS No. 5, "Accounting for Contingencies". The Company has not received either written or oral tax opinions that are contrary to its assessment of the recorded income tax contingency accrual.

This excerpt taken from the PCR 10-K filed Mar 4, 2005.

[5] Income Taxes

The (provision) credit for income taxes is comprised of the following (in thousands):

                          Federal        State         Total
                        -----------  -------------  ------------

2004
  Current                 $   (360)      $   (650)     $ (1,010)
  Deferred                  (7,654)          (255)       (7,909)
                        -----------  -------------  ------------
                          $ (8,014)      $   (905)     $ (8,919)
                        ===========  =============  ============
2003
  Current                 $   (529)      $ (1,380)     $ (1,909)
  Deferred                  16,023         (1,018)       15,005
                        -----------  -------------  ------------
                          $ 15,494       $ (2,398)     $ 13,096
                        ===========  =============  ============
2002
  Current                 $    249       $ (1,050)     $   (801)
  Deferred                       -              -             -
                        -----------  -------------  ------------
                          $    249       $ (1,050)     $   (801)
                        ===========  =============  ============

The table below reconciles the difference between the statutory federal income tax rate and the effective rate provided for income before income taxes in the consolidated statements of income.

                                                    2004          2003           2002
                                                 -----------    ----------    -----------

Statutory federal income tax rate                     35%           35%            35%
State income taxes, net of federal tax benefit         2             3             3
Recoginition of current year tax benefit               -           (35)          (35)
Reversal of valuation allowance                      (18)          (45)            -
Other                                                  1             -             -
                                                 -----------    ----------    -----------
Effective tax rate                                    20%          (42)%           3%
                                                 ===========    ==========    ===========

The following is a summary of the significant components of the Company's deferred tax assets and liabilities as of December 31, 2004 and 2003 (in thousands):

68


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2004, 2003 and 2002 (continued)

[5] Income Taxes (continued)

                                                              2004           2003
                                                         ------------   ------------
Deferred Tax Assets
Provision for estimated real estate losses                 $      71      $     101
Contract losses                                                    -          2,392
Timing of expense recognition                                 12,161         10,234
Net operating loss carryforwards                              19,969         22,325
Alternative minimum tax credit carryforwards                   3,777          3,619
Other, net                                                       (21)         1,068
                                                         ------------   ------------
                                                           $  35,957      $  39,739
Valuation allowance for deferred tax assets                     (490)        (8,400)
                                                         ------------   ------------
  Deferred tax assets                                      $  35,467      $  31,339
                                                         ------------   ------------

Deferred Tax Liabilities
Joint ventures - construction                              $ (18,576)     $ (15,883)
Capitalized carrying charges                                    (129)          (451)
                                                         ------------   ------------
  Deferred tax liabilities                                 $ (18,705)     $ (16,334)
                                                         ------------   ------------

  Net deferred tax asset                                   $  16,762      $  15,005
                                                         ============   ============

The net deferred asset as of December 31, 2004 is classified in the Consolidated Balance Sheet based on when the future benefit is expected to be realized as follows (in thousands):

Short-term "Deferred tax asset"     $  4,110
Long-term "Deferred tax asset"        12,652
                                -------------
                                    $ 16,762
                                =============

A valuation allowance is provided to reduce the deferred tax assets to a level which, more likely than not, will be realized. The ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible. The net deferred tax assets reflect management's estimate of the amount which would, more likely than not, be realized from future taxable income.

As a result of not providing federal income tax benefit applicable to losses recorded in certain prior years for financial reporting purposes, benefit from these losses was realized in 2004, 2003 and 2002 by not having to provide federal income tax of approximately $7.9 million, $11.0 million and $8.5 million, respectively. In addition, during the year ended December 31, 2003, the Company recognized an additional $14.9 million tax benefit based on expected utilization of net operating loss carryforwards.

At December 31, 2004, the Company has unused net operating loss carryforwards for tax reporting purposes of approximately $57.0 million, of which $1.4 million expires during the 2005 - 2007 period and $55.6 million expires during the 2008 - 2021 period. At December 31, 2004, the Company also has unused alternative minimum tax credit carryforwards for income tax reporting purposes of approximately $3.8 million that have no expiration date.

69


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2004, 2003 and 2002 (continued)

[6] Other Assets, Other Long-term Liabilities and Other (Income) Expense, Net

Other Assets, Other Long-term Liabilities and Other (Income) Expense, Net consist of the following (in thousands) for the periods presented:

Other Assets
                                                                 2004           2003
                                                             -------------  -------------
  Land held for sale (Note 13)                                 $  2,523       $  2,762
  Deferred expenses                                               1,162          1,510
  Other investments                                                  48             63
  Intangible assets (Notes 3 and 7)                                   -            599
                                                             -------------  -------------
                                                               $  3,733       $  4,934
                                                             =============  =============

Other Long-term Liabilities
                                                                 2004           2003
                                                             -------------  -------------
  Accrued dividends on
    $21.25 Preferred Stock (Note 8)                            $ 10,993       $  9,805
  Employee benefit related liabilities                            1,923          1,885
  Minimum pension liability adjustment (Note 7)                  29,020         24,325
                                                             -------------  -------------
                                                               $ 41,936       $ 36,015
                                                             =============  =============

Other (Income) Expense, Net
                                                                 2004           2003          2002
                                                             -------------  -------------  ------------
  Amortization of intangible asset                             $  1,616       $    287         $   -
  Stock registration expense                                      1,687              -             -
  Loss (gain) from land sales, net (Note 13)                        316         (2,207)            -
  Interest  income                                                 (474)          (226)         (297)
  Bank fees                                                         559            483           302
  Miscellaneous expense, net                                        999            228           515
                                                             -------------  -------------  ------------
                                                               $  4,703       $ (1,435)        $ 520
                                                             =============  =============  ============
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