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Income Taxes | 12 Months Ended
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Dec. 31, 2012
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES Deferred Tax Assets and Liabilities Deferred tax assets and liabilities are provided to record the effects of temporary differences between the tax basis of an asset or liability and its amount as reported in our consolidated balance sheets. These temporary differences result in taxable or deductible amounts in future years. Deferred tax assets and liabilities presented on the consolidated balance sheets are as follows:
| December 31,
| 2012 |  | 2011
| (In thousands)
Current deferred tax liability | $ | 7,473 |  |  | $ | — |
Non-current deferred tax liability | 139,943 |  |  | 379,958 |
Current deferred tax asset | 3,561 |  |  | 21,570 |
Net deferred tax liability | $ | 143,855 |  |  | $ | 358,388 |
The components comprising our deferred tax assets and liabilities are as follows:
| December 31,
| 2012 |  | 2011
| (In thousands)
Deferred tax assets |  |  |
Difference between book and tax basis of property | $ | 114,742 |  |  | $ | — |
Federal net operating loss carryforwards | 39,996 |  |  | 11,504 |
Share-based compensation | 28,532 |  |  | 25,465 |
State net operating loss carryforwards | 26,230 |  |  | 13,883 |
Reserve for employee benefits | 14,647 |  |  | 14,159 |
Preopening expense | 8,155 |  |  | 4,141 |
Tax credit carryforwards | 4,309 |  |  | 2,722 |
Provision for doubtful accounts | 3,709 |  |  | 4,807 |
Reserve differential for gaming activities | 2,510 |  |  | 596 |
Other | 16,322 |  |  | 19,259 |
Gross deferred tax assets | 259,152 |  |  | 96,536 |
Valuation allowance | (204,583 | ) |  | (11,238 | )
Deferred tax assets, net of valuation allowance | 54,569 |  |  | 85,298 |
Deferred tax liabilities |  |  |
Difference between book and tax basis of intangible assets | 161,214 |  |  | 152,140 |
State tax liability | 19,389 |  |  | 28,770 |
Prepaid services and supplies | 11,068 |  |  | 6,723 |
Gain on early retirement of debt | 6,731 |  |  | 6,731 |
Difference between book and tax basis of property | — |  |  | 243,812 |
Other | 22 |  |  | 5,510 |
Gross deferred tax liabilities | 198,424 |  |  | 443,686 |
Deferred tax liabilities, net | $ | 143,855 |  |  | $ | 358,388 |
At December 31, 2012, we had unused federal general business tax credits of approximately $4.3 million which may be carried forward or used until expiration beginning in 2030. We have a federal income tax net operating loss of approximately $104.0 million, which may be carried forward or used until expiration beginning in 2031. We also have state income tax net operating loss carryforwards of approximately $365.9 million, which may be used to reduce future state income taxes. The state net operating loss carryforwards will expire in various years ranging from 2013 to 2032, if not fully utilized. As a result of certain realization requirements of ASC 718, Compensation - Stock Compensation, the table of deferred tax assets and liabilities shown above does not include certain deferred tax assets as of December 31, 2012, and December 31, 2011, that arose directly from (or the use of which was postponed by) tax deductions related to equity compensation that are greater than the compensation recognized for financial reporting. Equity will be increased if and when such deferred tax assets are ultimately realized. The Company uses ASC 740 ordering when determining when excess tax benefits have been realized. Valuation Allowance on Deferred Tax Assets Management assesses available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. In evaluating our ability to recover deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies and results of recent operations. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2012. As of December 31, 2012, we concluded that it was more likely than not that the benefit from certain deferred tax assets would not be realized. As a result of our analysis, a valuation allowance of $182.5 million has been recorded on our federal income tax net operating loss carryforwards and certain other deferred tax assets. The amount of the deferred tax assets considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth. A valuation allowance in the amount of $22.1 million has also been recorded on a material portion of our state income tax operating losses, along with certain other state deferred tax assets, which are not presently expected to be realized. Provision (Benefit) for Income Taxes A summary of the provision (benefit) for income taxes is as follows:
| Year Ended December 31,
| 2012 |  | 2011 |  | 2010
| (In thousands)
Current |  |  |  |  |
Federal | $ | (235 | ) |  | $ | (550 | ) |  | $ | 1,892 |
State | 302 |  |  | 2,603 |  |  | 3,090 |
Total current taxes | 67 |  |  | 2,053 |  |  | 4,982 |
Deferred |  |  |  |  |
Federal | (215,710 | ) |  | (3,287 | ) |  | 1,022 |
State | (5,129 | ) |  | 2,955 |  |  | 2,232 |
Total deferred taxes | (220,839 | ) |  | (332 | ) |  | 3,254 |
Provision for income taxes | $ | (220,772 | ) |  | $ | 1,721 |  |  | $ | 8,236 |
Our tax benefit for the year ended December 31, 2012 was adversely impacted by a valuation allowance on our deferred tax assets. A valuation allowance was also applied to our federal and certain state income tax net operating losses and other deferred tax assets. The tax benefit was favorably impacted by the reversal of interest accrued on unrecognized tax benefits, resulting from the effective settlement reached in connection with our IRS audit. Our tax provision for the year ended December 31, 2011 was adversely impacted by certain recurring permanent adjustments that are unaffected by our loss from continuing operations and favorably impacted by a nontaxable acquisition related gain. Additionally, our state tax provision was adversely impacted by a statutory change in state income tax rates, changes in apportionment and the geographic mix of our income. The relative impact of equity based state taxes was also more significant in 2011 due to a loss from continuing operations. Our tax provision for the year ended December 31, 2010 was adversely impacted by a statutory change in state income tax rates, changes in apportionment and the geographic mix of our income; and favorably impacted by the release of valuation allowances resulting from the organizational restructuring of our Louisiana properties. Our effective tax rates are also impacted by permanent adjustments related to our consolidation of Borgata and LVE. We consolidate Borgata and LVE for financial statement purposes; however, under federal income tax statutes, we are subject to income tax on our fifty percent interest in Borgata and exclude LVE in its entirety. The following table provides a reconciliation between the federal statutory rate and the effective income tax rate, expressed as a percentage of income from operations before income taxes, for the years ended December 31, 2012, 2011 and 2010.
| Year Ended December 31,
| 2012 |  | 2011 |  | 2010
Tax at federal statutory rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
Valuation allowance for deferred tax assets | (15.5 | )% |  | — | % |  | — | %
Noncontrolling interests | (0.5 | )% |  | (27.7 | )% |  | (1.5 | )%
State income taxes, net of federal benefit | 0.4 | % |  | (52.8 | )% |  | 11.9 | %
Company provided benefits | (0.1 | )% |  | (6.9 | )% |  | 3.5 | %
Compensation-based credits | 0.1 | % |  | 16.3 | % |  | (6.0 | )%
Accrued interest on uncertain tax benefits | — | % |  | (16.0 | )% |  | 1.6 | %
Nontaxable gain on acquisition | — | % |  | 25.5 | % |  | — | %
Other, net | (0.1 | )% |  | (0.8 | )% |  | (4.3 | )%
Effective tax rate | 19.3 | % |  | (27.4 | )% |  | 40.2 | %
Status of Examinations During 2012, we effectively settled our 2001-2004 Internal Revenue Service examination and received Notices of Proposed Adjustments (“Adjustments”) in connection with our 2005-2009 Internal Revenue Service examination. We have agreed to certain Adjustments and the related tax effect is presented in our consolidated balance sheet. We continue to evaluate the remaining Adjustments and to the extent they remain unresolved at the audit's conclusion, we intend to contest such Adjustments through available administrative procedures. The Internal Revenue Service has rescinded the Adjustments issued in 2011 related to our capitalization policy on certain repair expenditures, consistent with guidelines issued in anticipation of final tangible property regulations. The expiration of the statute of limitation related to our federal tax returns for the tax years 2003 through 2004 and 2005 through 2009 have been extended to December 31, 2013 and June 30, 2014, respectively. Additionally, although tax years 2001 and 2002 are closed by statute, the tax returns filed in those years are subject to adjustment, to the extent of net operating loss carrybacks utilized in those years. The statute of limitations for our remaining federal tax returns will expire over the period September 2014 through September 2016. We are also currently under examination for various state income and franchise tax matters. Certain adjustments in the state examinations are contingent on resolution of our federal examinations. As it relates to our material state returns, we are subject to examination for tax years ended on or after December 31, 2001 and the statute of limitations will begin to expire over the period September 2013 through October 2017. Based on our current expectations for the final resolutions of these federal and state income tax matters, we believe that we have adequately reserved for any tax liability; however, the ultimate resolution of these examinations may result in an outcome that is different than our current expectation. We do not believe the ultimate resolution of these examinations will have a material impact on our consolidated financial statements. Other Long-Term Tax Liabilities The impact of an uncertain income tax position taken in our income tax return is recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position is not recognized if it has less than a 50% likelihood of being sustained. Our liability for uncertain tax positions is recorded as other current tax liabilities and other long-term tax liabilities in our consolidated balance sheets. A reconciliation of the beginning and ending amount of unrecognized tax benefits as follows:
| Year Ended December 31,
| 2012 |  | 2011 |  | 2010
| (In thousands)
Unrecognized tax benefit, beginning of year | $ | 42,320 |  |  | $ | 38,336 |  |  | $ | 29,053 |
Additions: |  |  |  |  |
Tax positions related to consolidation of Borgata | — |  |  | — |  |  | 8,714 |
Tax positions related to current year | 1,468 |  |  | 1,438 |  |  | 1,511 |
Tax positions related to prior years | 15,456 |  |  | 3,718 |  |  | — |
Reductions: |  |  |  |  |
Tax positions related to prior years | (10,969 | ) |  | (1,172 | ) |  | (918 | )
Settlement with taxing authorities | (9,852 | ) |  | — |  |  | — |
Lapse of applicable statute of limitations | — |  |  | — |  |  | (24 | )
Unrecognized tax benefits | $ | 38,423 |  |  | $ | 42,320 |  |  | $ | 38,336 |
Included in the $38.4 million balance of unrecognized tax benefits at December 31, 2012, are $6.7 million of federally tax effected benefits that, if recognized, would impact the effective tax rate. We recognize accrued interest related to unrecognized tax benefits in our income tax provision. During the years ended December 31, 2012, 2011 and 2010, we recognized accrued interest and penalties of approximately $(0.2) million, $2.4 million and $2.0 million, respectively, in our income tax provision. We have accrued $12.4 million and $12.6 million of interest and penalties as of December 31, 2012 and 2011, respectively, in our consolidated balance sheets. As a result of the effective settlement in our 2001-2004 Internal Revenue Service examination, we reduced our unrecognized tax benefits by $9.9 million, of which $0.1 million impacted our effective tax rate. Additionally, we reduced the interest accrued on our unrecognized tax benefits by $4.0 million and recorded a $2.6 million benefit to our tax provision. We are in various stages of the examination and appeals process in connection with many of our audits and it is difficult to determine when these examinations will be closed; however, it is reasonably possible over the next twelve-month period that our unrecognized tax benefits as of December 31, 2012, may decrease by approximately $1.2 million to $22.6 million, of which up to $1.1 million could impact our effective tax rate. Such reduction is due to the resolution of certain issues, primarily related to the depreciable lives of assets, raised in connection with our federal and state examinations. Other than the resolution of the audits discussed above, we do not anticipate any material changes to our unrecognized tax benefits over the next twelve-month period.

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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 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 2: 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 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: 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 5: 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 6: 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 7: 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 8: 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 + Details
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