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Income Taxes | 12 Months Ended
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Nov. 30, 2011
Income Taxes [Abstract] |
Income Taxes | Note 15. Income Taxes The components of income tax benefit (expense) in the consolidated statements of operations are as follows (in thousands):
|  | Federal |  |  | State |  |  | Total |
2011 |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | 2,600 |  |  | $ | (200 | ) |  | $ | 2,400 |
Deferred |  |  | — |  |  |  | — |  |  |  | — |
Income tax benefit (expense) |  | $ | 2,600 |  |  | $ | (200 | ) |  | $ | 2,400 |
2010 |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | 6,500 |  |  | $ | 500 |  |  | $ | 7,000 |
Deferred |  |  | — |  |  |  | — |  |  |  | — |
Income tax benefit |  | $ | 6,500 |  |  | $ | 500 |  |  | $ | 7,000 |
2009 |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | 207,900 |  |  | $ | 1,500 |  |  | $ | 209,400 |
Deferred |  |  | — |  |  |  | — |  |  |  | — |
Income tax benefit |  | $ | 207,900 |  |  | $ | 1,500 |  |  | $ | 209,400 |
Deferred income taxes result from temporary differences in the financial and tax basis of assets and liabilities. Significant components of the Company’s deferred tax liabilities and assets are as follows (in thousands):
|  | November 30, |
|  | 2011 |  |  | 2010 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Capitalized expenses |  | $ | 98,677 |  |  | $ | 106,800 |
State taxes |  |  | 61,550 |  |  |  | 56,915 |
Other |  |  | 190 |  |  |  | 177 |
Total |  | $ | 160,417 |  |  | $ | 163,892 |
Deferred tax assets: |  |  |  |  |  |  |  |
Inventory impairments and land option contract abandonments |  | $ | 219,457 |  |  | $ | 275,640 |
2011, 2010, 2009 and 2008 NOLs |  |  | 412,901 |  |  |  | 277,089 |
Warranty, legal and other accruals |  |  | 61,189 |  |  |  | 103,359 |
Employee benefits |  |  | 57,699 |  |  |  | 51,335 |
Partnerships and joint ventures |  |  | 83,693 |  |  |  | 49,339 |
Depreciation and amortization |  |  | 13,577 |  |  |  | 22,830 |
Capitalized expenses |  |  | 6,233 |  |  |  | 5,927 |
Tax credits |  |  | 151,300 |  |  |  | 145,643 |
Deferred income |  |  | 830 |  |  |  | 1,219 |
Other |  |  | 2,517 |  |  |  | 3,743 |
Total |  |  | 1,009,396 |  |  |  | 936,124 |
Valuation allowance |  |  | (847,827 | ) |  |  | (771,080 | )
Total |  |  | 161,569 |  |  |  | 165,044 |
Net deferred tax assets |  | $ | 1,152 |  |  | $ | 1,152 |
The income tax benefit computed at the statutory United States federal income tax rate and the income tax benefit provided in the consolidated statements of operations differ as follows (in thousands):
|  | Years Ended November 30, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Income tax benefit computed at statutory rate |  | $ | 63,397 |  |  | $ | 26,729 |  |  | $ | 108,914 |
Increase (decrease) resulting from: |  |  |  |  |  |  |  |  |  |  |  |
State taxes, net of federal income tax benefit |  |  | 4,691 |  |  |  | 4,010 |  |  |  | 11,079 |
Reserve and deferred income |  |  | (1,161 | ) |  |  | 1,204 |  |  |  | (11,075 | )
Capitalized expenses |  |  | (3,589 | ) |  |  | — |  |  |  | — |
Basis in joint ventures |  |  | 4,401 |  |  |  | 13,729 |  |  |  | (3,336 | )
NOLs reconciliation |  |  | 715 |  |  |  | (24,749 | ) |  |  | (36,941 | )
Recognition of federal tax benefits |  |  | 2,600 |  |  |  | 1,621 |  |  |  | 16,411 |
Tax credits |  |  | 5,477 |  |  |  | 5,384 |  |  |  | 203 |
Valuation allowance for deferred tax assets |  |  | (76,747 | ) |  |  | (21,115 | ) |  |  | 128,813 |
Other, net |  |  | 2,616 |  |  |  | 187 |  |  |  | (4,668 | )
Income tax benefit |  | $ | 2,400 |  |  | $ | 7,000 |  |  | $ | 209,400 |
The Company recognized income tax benefits of $2.4 million in 2011, $7.0 million in 2010 and $209.4 million in 2009. The income tax benefit in 2011 reflected the reversal of a $2.6 million liability for unrecognized tax benefits due to the status of federal and state tax audits. The income tax benefit in 2010 reflected the recognition of a $5.4 million federal income tax benefit from an additional carryback of the Company’s 2009 NOLs to offset earnings the Company generated in 2004 and 2005, and the reversal of a $1.6 million liability for unrecognized tax benefits due to the status of federal and state tax audits. The income tax benefit in 2009 resulted primarily from the recognition of a $190.7 million federal income tax benefit based on the carryback of the Company’s 2009 NOLs to offset earnings the Company generated in 2004 and 2005, and the reversal of a $16.3 million liability for unrecognized federal and state tax benefits due to the status of federal and state tax audits. Due to the effects of its deferred tax asset valuation allowances, carrybacks of its NOLs, and changes in its unrecognized tax benefits, the Company’s effective tax rates in 2011, 2010 and 2009 are not meaningful items as the Company’s income tax amounts are not directly correlated to the amount of its pretax losses for those periods. In accordance with ASC 740, the Company evaluates its deferred tax assets quarterly to determine if adjustments to the valuation allowance are required. ASC 740 requires that companies assess whether a valuation allowance should be established based on the consideration of all available evidence using a “more likely than not” standard with respect to whether deferred tax assets will be realized. During 2011, the Company recorded a valuation allowance of $76.7 million against net deferred tax assets generated from the loss for the year. During 2010, the Company recorded a net increase of $21.1 million to the valuation allowance against net deferred tax assets, reflecting a $26.6 million valuation allowance recorded against the net deferred tax assets generated from the loss for the year that was partially offset by the $5.4 million federal income tax benefit from the additional carryback of the Company’s 2009 NOLs. During 2009, the Company recognized a net decrease of $128.8 million in the valuation allowance, reflecting the net impact of a $67.5 million increase in the valuation allowance recorded during the first nine months of 2009 that was more than offset by a decrease in the valuation allowance of $196.3 million, primarily due to the benefit derived from the carryback of its 2009 NOLs. The decrease in the valuation allowance was reflected as a noncash income tax benefit of $130.7 million and a noncash charge of $1.9 million to accumulated other comprehensive loss. The majority of the tax benefits associated with the Company’s net deferred tax assets can be carried forward for 20 years and applied to offset future taxable income. The federal NOL carryforwards, if not utilized, will begin to expire in 2030, and the various state NOLs will expire within the next two to 20 years. In addition, some of the Company’s tax credits, if not utilized, will expire within five to 20 years. The Company’s net deferred tax assets totaled $1.1 million at both November 30, 2011 and 2010. The deferred tax asset valuation allowance increased to $847.8 million at November 30, 2011 from $771.1 million at November 30, 2010, reflecting the net impact of the $76.7 million valuation allowance recorded in 2011. The Company’s deferred tax assets for which it did not establish a valuation allowance relate to amounts that can be realized through future reversals of existing taxable temporary differences or through carrybacks to the 2007 year. To the extent the Company generates sufficient taxable income in the future to fully utilize the tax benefits of the related deferred tax assets, the Company expects its effective tax rate to decrease as the valuation allowance is reversed. Gross unrecognized tax benefits are the differences between a tax position taken, or expected to be taken in a tax return, and the benefit recognized for accounting purposes. A reconciliation of the beginning and ending balances of the gross unrecognized tax benefits, excluding interest and penalties, is as follows (in thousands):
|  | Years Ended November 30, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Balance at beginning of year |  | $ | 11,308 |  |  | $ | 11,024 |  |  | $ | 18,332 |
Additions for tax positions related to prior years |  |  | 5 |  |  |  | 1,720 |  |  |  | 4,230 |
Reductions for tax positions related to prior years |  |  | — |  |  |  | (1,183 | ) |  |  | (270 | )
Reductions related to settlement |  |  | (264 | ) |  |  | — |  |  |  | — |
Reductions due to lapse of statute of limitations |  |  | (2,476 | ) |  |  | — |  |  |  | (1,277 | )
Reductions due to resolution of federal and state audits |  |  | (6,674 | ) |  |  | (253 | ) |  |  | (9,991 | )
Balance at end of year |  | $ | 1,899 |  |  | $ | 11,308 |  |  | $ | 11,024 |
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in its consolidated financial statements as a component of the provision for income taxes. As of November 30, 2011, 2010 and 2009, there were $.9 million, $.9 million and $1.3 million, respectively, of unrecognized tax benefits that if recognized would affect the Company’s annual effective tax rate. The Company’s total accrued interest and penalties related to unrecognized income tax benefits was $.9 million at November 30, 2011 and $3.5 million at November 30, 2010. The Company’s liabilities for unrecognized tax benefits at November 30, 2011 and 2010 are included in accrued expenses and other liabilities in its consolidated balance sheets. Included in the balance of gross unrecognized tax benefits at November 30, 2011 and 2010 are tax positions of $1.0 million and $7.9 million, respectively, for which the ultimate deductibility is highly certain but there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate, but would accelerate the payment of cash to a tax authority to an earlier period. As of November 30, 2011, the Company’s gross unrecognized tax benefits (including interest and penalties) totaled $2.8 million. The Company anticipates that these gross unrecognized tax benefits will decrease by an amount ranging from $1.0 million to $1.5 million during the 12 months from this reporting date due to various state filings associated with the resolution of a federal audit. The fiscal years ending after 2005 remain open to federal examination and fiscal years after 2004 remain open to examination by various state taxing jurisdictions. The benefits of the Company’s NOLs, built-in losses and tax credits would be reduced or potentially eliminated if the Company experienced an “ownership change” under Section 382. Based on the Company’s analysis performed as of November 30, 2011, the Company does not believe that it has experienced an ownership change as defined by Section 382, and, therefore, the NOLs, built-in losses and tax credits the Company has generated should not be subject to a Section 382 limitation as of this reporting date.

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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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