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Income Taxes | 12 Months Ended
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Dec. 31, 2011
Income Tax Disclosure [Abstract] |
Income Taxes | Income taxes Components of current and deferred income tax expense (benefit) are as follows ($000’s omitted):
| 2011 |  | 2010 |  | 2009
Current provision (benefit) |  |  |  |  |
Federal | $ | (71,796 | ) |  | $ | (114,617 | ) |  | $ | (812,744 | )
State and other | (28,116 | ) |  | (23,200 | ) |  | (17,395 | )
| $ | (99,912 | ) |  | $ | (137,817 | ) |  | $ | (830,139 | )
Deferred provision (benefit) |  |  |  |  |
Federal | $ | — |  |  | $ | — |  |  | $ | 37,587 |
State and other | — |  |  | — |  |  | — |
| $ | — |  |  | $ | — |  |  | $ | 37,587 |
Income tax expense (benefit) | $ | (99,912 | ) |  | $ | (137,817 | ) |  | $ | (792,552 | )
The following table reconciles the statutory federal income tax rate to the effective income tax rate:
| 2011 |  | 2010 |  | 2009
Income taxes at federal statutory rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
Effect of state and local income taxes, net of federal tax | 3.0 |  |  | 3.0 |  |  | 3.0 |
Deferred tax asset valuation allowance | (7.0 | ) |  | (12.4 | ) |  | 18.4 |
Tax contingencies | 28.4 |  |  | 5.0 |  |  | (4.7 | )
Goodwill impairment | (28.7 | ) |  | (19.7 | ) |  | (9.7 | )
Other | 1.5 |  |  | 0.3 |  |  | (1.9 | )
Effective rate | 32.2 | % |  | 11.2 | % |  | 40.1 | %
The net deferred tax asset (liability) is as follows ($000’s omitted):
| At December 31,
| 2011 |  | 2010
Deferred tax assets: |  |  |
Non-deductible reserves and other | $ | 446,605 |  |  | $ | 312,186 |
Inventory valuation reserves | 1,197,271 |  |  | 1,449,261 |
Net operating loss ("NOL") carryforwards: |  |  |
Federal | 663,733 |  |  | 592,345 |
State | 299,292 |  |  | 287,458 |
Alternative minimum tax credits | 25,193 |  |  | 25,193 |
Energy credit and charitable contribution carryforward | 38,586 |  |  | 36,045 |
| 2,670,680 |  |  | 2,702,488 |
Deferred tax liabilities: |  |  |
Capitalized items, including real estate basis differences, deducted for tax, net | (91,399 | ) |  | (64,130 | )
Trademarks and tradenames | (61,692 | ) |  | (66,671 | )
| (153,091 | ) |  | (130,801 | )
Valuation allowance | (2,517,589 | ) |  | (2,571,687 | )
Net deferred tax asset (liability) | $ | — |  |  | $ | — |
Our income tax expense (benefit) was $(99.9) million, $(137.8) million, and $(792.6) million in 2011, 2010, and 2009, respectively. These amounts represent effective tax rates of 32.2%, 11.2%, and 40.1% for 2011, 2010, and 2009, respectively. Due to the effects of the deferred tax valuation allowance and changes in unrecognized tax benefits, our effective tax rates in 2011, 2010, and 2009 are not correlated to the amount of pretax loss. The income tax benefits for 2011 and 2010 resulted primarily from the favorable resolution of certain federal and state income tax matters. The income tax benefit for 2009 related primarily to the impact of the Worker, Homeownership, and Business Assistance Act of 2009 (the "Act"), which was enacted into law on November 6, 2009. The Act amended Section 172 of the Internal Revenue Code to allow NOLs realized in either tax year 2008 or 2009 to be carried back up to five years (previously limited to two years). We had income taxes receivable of $27.2 million and $81.3 million at December 31, 2011 and 2010, respectively. The income taxes receivable at December 31, 2011 related primarily to amended federal and state income tax returns. The income taxes receivable at December 31, 2010 related primarily to federal income tax refunds from amended returns and state NOL carrybacks, the majority of which was received in 2011. We had net deferred tax assets of $2.5 billion and $2.6 billion at December 31, 2011 and 2010. Based on our evaluation in accordance with ASC 740, we fully reserved the net deferred tax assets due to the uncertainty of realizing such deferred tax assets. The ultimate realization of these deferred tax assets is dependent upon the generation of taxable income during future periods. Changes in existing tax laws could also affect actual tax results and the valuation of deferred tax assets over time. The accounting for deferred taxes is based upon an estimate of future results. Differences between the estimated and actual results could have a material impact on our consolidated results of operations or financial position. To the extent that our results of operations improve, our deferred tax asset valuation allowance may be reduced. As a result of the Centex merger, our ability to use certain of Centex’s pre-ownership change NOLs and built-in losses or deductions is limited by Section 382 of the Internal Revenue Code. Our Section 382 limitation is approximately $67.4 million per year for NOLs, losses realized on built-in loss assets that are sold within 60 months of the ownership change (i.e. before August 2014), and certain deductions. The limitation may result in a significant portion of Centex’s pre-ownership change NOL carryforwards and future recognized built-in losses or deductions not being available for use by the Company. Our gross federal NOL carryforward is approximately $1.9 billion, a significant portion of which is subject to the provisions of Internal Revenue Code Section 382. We also have significant gross state NOLs in various tax jurisdictions. These NOLs may be carried forward from 5 to 20 years, depending on the tax jurisdiction, with losses expiring between 2012 and 2031. At December 31, 2011 we had $171.9 million of gross unrecognized tax benefits, of which $170.6 million would affect the effective tax rate if recognized. At December 31, 2010, we had $258.0 million of gross unrecognized tax benefits, of which $250.7 million would affect the effective rate if recognized. Additionally, we had accrued interest and penalties of $36.9 million and $48.4 million at December 31, 2011 and 2010, respectively. In 2011 and 2010, our income tax benefits included tax related interest and penalties. Such amounts totaled a benefit of $11.4 million in 2011 and $27.3 million in 2010. We are currently under examination by the IRS and various state taxing jurisdictions and anticipate finalizing certain of the examinations within the next twelve months. The final outcome of these examinations is not yet determinable. It is reasonably possible, within the next twelve months, that unrecognized tax benefits may decrease by up to $26.5 million, excluding interest and penalties, primarily due to expirations of certain statutes of limitations and potential settlements. The statute of limitations for our major tax jurisdictions remains open for examination for tax years 1998 to 2011. A reconciliation of the change in the unrecognized tax benefits is as follows ($000’s omitted):
| 2011 |  | 2010 |  | 2009
Unrecognized tax benefits, beginning of period | $ | 258,016 |  |  | $ | 326,088 |  |  | $ | 126,299 |
Assumed with Centex merger | — |  |  | — |  |  | 121,667 |
Decreases related to tax positions taken during the current period | — |  |  | — |  |  | (10,029 | )
Increases related to tax positions taken during a prior period | 2,699 |  |  | 55,385 |  |  | 37,303 |
Decreases related to tax positions taken during a prior period | (79,719 | ) |  | (14,025 | ) |  | (10,414 | )
Increases related to tax positions taken during the current period | 1,620 |  |  | 1,441 |  |  | 82,973 |
Decreases related to settlements with taxing authorities | — |  |  | (94,779 | ) |  | (1,389 | )
Reductions as a result of a lapse of the applicable statute of limitations | (10,753 | ) |  | (16,094 | ) |  | (20,322 | )
Unrecognized tax benefits, end of period | $ | 171,863 |  |  | $ | 258,016 |  |  | $ | 326,088 |

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 + Details
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