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Income Taxes | 12 Months Ended
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Dec. 31, 2012
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes. The difference between the book basis and the tax basis of our net assets, not directly subject to income taxes, is as follows:
| Icahn Enterprises |  | Icahn Enterprises Holdings
| Year Ended December 31, |  | Year Ended December 31,
| 2012 |  | 2011 |  | 2012 |  | 2011
| (in millions) |  | (in millions)
Book basis of net assets | $ | 4,669 |  |  | $ | 3,755 |  |  | $ | 4,691 |  |  | $ | 3,776 |
Book/tax basis difference | (1,840 | ) |  | (1,553 | ) |  | (1,840 | ) |  | (1,553 | )
Tax basis of net assets | $ | 2,829 |  |  | $ | 2,202 |  |  | $ | 2,851 |  |  | $ | 2,223 |
Our corporate subsidiaries recorded the following income tax benefit (expense) attributable to continuing operations for our taxable subsidiaries:
| Year Ended December 31,
| 2012 |  | 2011 |  | 2010
Continuing Operations | (in millions)
Current: |  |  |  |  |  |  |  |
Domestic | $ | (104 | ) |  | $ | (1 | ) |  | $ | 17 |
International | (53 | ) |  | (45 | ) |  | (54 | )
Total current | (157 | ) |  | (46 | ) |  | (37 | )
Deferred: |  |  |  |  |  |  |  |
Domestic | 191 |  |  | 4 |  |  | (15 | )
International | 47 |  |  | 8 |  |  | 43 |
Total deferred | 238 |  |  | 12 |  |  | 28 |
| $ | 81 |  |  | $ | (34 | ) |  | $ | (9 | )
The tax effect of significant differences representing deferred tax assets (liabilities) (the difference between financial statement carrying value and the tax basis of assets and liabilities) is as follows:
| Year Ended December 31,
| 2012 |  | 2011
| (in millions)
Deferred tax assets: |  |  |
Property, plant and equipment | $ | 146 |  |  | $ | 180 |
Net operating loss | 1,163 |  |  | 873 |
Tax credits | 134 |  |  | 120 |
Post-employment benefits, including pensions | 441 |  |  | 412 |
Reorganization costs | 51 |  |  | 78 |
Other | 311 |  |  | 167 |
Total deferred tax assets | 2,246 |  |  | 1,830 |
Less: Valuation allowance | (1,550 | ) |  | (1,403 | )
Net deferred tax assets | $ | 696 |  |  | $ | 427 |
Deferred tax liabilities: |  |  |  |  |
Property, plant and equipment | $ | (644 | ) |  | $ | (115 | )
Intangible assets | (377 | ) |  | (263 | )
Investment in partnerships | (303 | ) |  | (103 | )
Investment in U.S. subsidiaries | (307 | ) |  | (366 | )
Other | (27 | ) |  | (14 | )
Total deferred tax liabilities | (1,658 | ) |  | (861 | )
| $ | (962 | ) |  | $ | (434 | )
We recorded deferred tax assets and deferred tax liabilities of $373 million and $1,335 million, respectively, as of December 31, 2012 and $122 million and $556 million, respectively, as of December 31, 2011. Deferred tax assets are included in other assets in our consolidated balance sheets. We analyze all positive and negative evidence to consider whether it is more likely than not that all of the deferred tax assets will be realized. Projected future income, tax planning strategies and the expected reversal of deferred tax liabilities are considered in making this assessment. As of December 31, 2012 we had a valuation allowance of approximately $1.6 billion primarily related to tax loss and credit carryforwards, post-retirement benefits and other deferred tax assets. The current and future provisions for income taxes may be significantly impacted by changes to valuation allowances. These allowances will be maintained until it is more likely than not that the deferred tax assets will be realized. For 2012, the valuation allowance on deferred tax assets increased by $147 million. The increase is primarily attributable to a $399 million increase recorded by Federal Mogul, a $221 million decrease recorded by American Entertainment Properties Corp. ("AEP"), an indirect wholly owned subsidiary of ours, and decreases in the valuation allowance of $31 million recorded by other segments. For 2011, the valuation allowance on deferred tax assets increased by $1 million. The increase is primarily attributable to a $47 million decrease recorded by Federal-Mogul, increases in valuation allowance of $23 million and $30 million recorded by WPH and Viskase, respectively. A reconciliation of the effective tax rate on continuing operations as shown in the consolidated statements of operations to the federal statutory rate is as follows:
| Years Ended December 31,
| 2012 |  | 2011 |  | 2010
Federal statutory rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
Foreign Operations | 0.7 |  |  | 0.8 |  |  | 3.0 |
Valuation allowance | 14.8 |  |  | (0.6 | ) |  | (5.7 | )
Gain on settlement of liabilities subject to compromise | (51.7 | ) |  | (1.4 | ) |  | — |
Income not subject to taxation | (12.6 | ) |  | (31.4 | ) |  | (30.0 | )
Other | 1.3 |  |  | (0.5 | ) |  | (1.1 | )
| (12.5 | )% |  | 1.9 | % |  | 1.2 | %
Automotive Federal-Mogul did not record taxes on its undistributed earnings from foreign subsidiaries of $719 million at December 31, 2012 since these earnings are considered to be permanently reinvested. If at some future date, these earnings cease to be permanently reinvested, Federal-Mogul may be subject to U.S. income taxes and foreign withholding taxes on such amounts. Determining the unrecognized deferred tax liability on the potential distribution of these earnings is not practicable as such liability, if any, is dependent on circumstances existing when remittance occurs. As of December 31, 2012, Federal-Mogul had $467 million of cash and cash equivalents, of which $219 million was held by foreign subsidiaries. In accordance with FASB ASC 740-30-25-17 through 19, Federal-Mogul asserts that these funds are indefinitely reinvested due to operational and investing needs of the foreign locations. Furthermore, Federal-Mogul will accrue any applicable taxes in the period when it no longer intends to indefinitely reinvest these funds. Federal-Mogul expects that the impact on cash taxes would be immaterial due to: the availability of net operation loss carryforwards and related valuation allowances; earnings considered previously taxed; and applicable tax treaties. Federal-Mogul continues to maintain a valuation allowance related to its net deferred tax assets in multiple jurisdictions. As of December 31, 2012, Federal-Mogul had valuation allowances of $849 million related to tax loss and credit carryforwards. The current and future provisions for income taxes may be significantly impacted by changes to valuation allowances in certain countries. These allowances will be maintained until it is more likely than not that the deferred tax assets will be realized. The future provision for income taxes will include no tax benefit with respect to losses incurred and no tax expense with respect to income generated in these countries until the respective valuation allowance is eliminated. At December 31, 2012, Federal-Mogul had a deferred tax asset before valuation allowance of $903 million for tax loss carryforwards and tax credits, including approximately $507 million in the United States with expiration dates from fiscal 2013 through fiscal 2032; $199 million in the United Kingdom with no expiration date; and $197 million in other jurisdictions with various expiration dates. Energy On May 19, 2012, CVR became a member of the consolidated federal tax group of AEP. At December 31, 2012, CVR has Kansas state income tax credits of approximately $10 million, which are available to reduce future Kansas state regular income taxes. These credits, if not used, will expire in 2027 to 2028. Additionally, CVR has Oklahoma state income tax credits of approximately $4 million which are available to reduce future Oklahoma state regular income taxes. These credits have an indefinite life. Gaming, Home Fashion, Food Packaging and Other At December 31, 2012, AEP, which includes CVR, Metals, Home Fashion and Real Estate segments, among others, had $727 million of net operating loss carryforwards with expiration dates from years 2025 through 2031. During 2012, WPH merged into a newly formed single member limited liability company owned by AEP. The merger constituted a tax free reorganization. In addition, AEP acquired a controlling interest in CVR during 2012. CVR has a history of significant earnings and projections of future earnings. Pursuant to these transactions, AEP evaluated all positive and negative evidence associated with its deferred tax assets and, primarily as a result of the merger of WPH and the change in estimated future earnings from the acquisition of CVR, AEP concluded it was more likely than not that all of the federal net operating loss carryforward related to our Home Fashion segment would be realized. Accordingly, during 2012, AEP reversed $221 million of valuation allowance related to our Home Fashion segment's deferred tax assets. Due to separate company net operating loss limitations, AEP could not determine that it was more likely than not to realize some of the state net operating loss carryforwards and the federal net operating loss carryforward from other segments. The valuation allowance on these deferred tax assets is approximately $48 million as of December 31, 2012. At December 31, 2012, Atlantic Coast had a federal net operating loss carryforward of $11 million, which will begin expiring in the year 2025 and forward. At December 31, 2012, Viskase had U.S. federal and state net operating loss carryforwards of $107 million which will begin expiring in the year 2024 and forward, and foreign net operating loss carryforwards of $927 million with $325 million that begins expiring in 2015 and the remainder has an unlimited carryforward period. A U.S. based valuation allowance of $55 million has been recorded at December 31, 2012, as Viskase believes it is more likely than not that all deferred tax assets will not be fully realized based on the expectation of taxable income in future years. Viskase did not record taxes on its undistributed earnings from foreign subsidiaries of $62 million at December 31, 2012 since these earnings are considered to be permanently reinvested. Viskase may be subject to U.S. income taxes and foreign withholding taxes on such amounts. Determining the unrecognized deferred tax liability on the potential distribution of these earnings is not practicable as such liability, if any, is dependent on circumstances existing when remittance occurs. At December 31, 2012, ARI had state net operating losses of $6 million, which expires between 2014 and 2031. ARI considers its Canadian earnings to be permanently reinvested, and therefore has not recorded a provision for U.S. income tax or foreign withholding taxes on the cumulative earnings of its Canadian subsidiary. Such undistributed earnings from ARI's Canadian subsidiary have been included in consolidated retained earnings of approximately $2 million for both December 31, 2012 and 2011. If ARI were to change its intentions and such earnings were remitted to the U.S., these earnings would be subject to U.S. income taxes. However, as of December 31, 2012 and 2011 foreign tax credits would be available to offset these taxes such that the U.S. tax impact would be insignificant. Tropicana has federal NOL carryforwards pursuant to the purchase of Adamar of New Jersey, Inc. (“Adamar”). Internal Revenue Code Section 382 (“Code 382”) places certain limitations on the annual amount of NOL carryforwards that can be utilized when a change of ownership occurs. Tropicana believes its purchase of Adamar was a change in ownership pursuant to Code 382. As a result of the annual limitation, the NOL carryforward amount available to be used in future periods is approximately $174 million and will begin to expire in the year 2028 and forward. As of December 31, 2012, Tropicana could not determine that it was more likely than not that it would utilize its NOL carryforwards before expiration and accordingly has established a full valuation allowance. Accounting for Uncertainty in Income Taxes A summary of the changes in the gross amounts of unrecognized tax benefits for the fiscal years ended December 31, 2012, 2011 and 2010 are as follows:
| Years Ended December 31,
| 2012 |  | 2011 |  | 2010
| (in millions)
Balance at January 1 | $ | 388 |  |  | $ | 407 |  |  | $ | 430 |
Addition based on tax positions related to the current year | 23 |  |  | 7 |  |  | 7 |
Acquisition of CVR | 18 |  |  | — |  |  | — |
Increase for tax positions of prior years | 15 |  |  | 27 |  |  | 7 |
Decrease for tax positions of prior years | (15 | ) |  | (20 | ) |  | (9 | )
Decrease for statute of limitation expiration | (14 | ) |  | (9 | ) |  | (21 | )
Settlements | (301 | ) |  | (21 | ) |  | — |
Impact of currency translation and other | (1 | ) |  | (3 | ) |  | (7 | )
Balance at December 31 | $ | 113 |  |  | $ | 388 |  |  | $ | 407 |
At December 31, 2012, 2011 and 2010, we had unrecognized tax benefits of $113 million, $388 million and $407 million, respectively. Of these totals, $54 million, $71 million and $81 million represents the amount of unrecognized tax benefits that if recognized, would affect the annual effective tax rate in the respective periods. The total unrecognized tax benefits differ from the amount which would affect the effective tax rate primarily due to the impact of valuation allowances. During the next 12 months, Federal-Mogul believes that it is reasonably possible that unrecognized tax benefits of Federal-Mogul may decrease by approximately $22 million due to audit settlements or statute expirations, of which approximately $5 million, if recognized, could impact the effective tax rate. We do not anticipate any significant changes to the amount of our unrecognized tax benefits in our other business segments during the next 12 months. We recognize interest and penalties accrued related to unrecognized tax benefits as a component of income tax expense. We recorded $17 million, $14 million and $18 million as of December 31, 2012, 2011 and 2010, respectively, in liabilities for tax related net interest and penalties in our consolidated balance sheets. Income tax expense related to interest and penalties were $3 million for each of 2012, 2011 and 2010. We or certain of our subsidiaries file income tax returns in the U.S. federal jurisdiction, various state jurisdictions and various non-U.S. jurisdictions. We and our subsidiaries are no longer subject to U.S. federal tax examinations for years before 2009 or state and local examinations for years before 2008, with limited exceptions. We, or our subsidiaries, are currently under various income tax examinations in several states and foreign jurisdictions, but are no longer subject to income tax examinations in major foreign jurisdictions for years prior to 2004.

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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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