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Income Taxes | 6 Months Ended
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Jun. 30, 2013
Income Tax Disclosure [Abstract] |
Income Taxes | 11. INCOME TAXES Ambac files a consolidated Federal income tax return with its subsidiaries. Ambac and its subsidiaries also file separate or combined income tax returns in various states, local and foreign jurisdictions. The following are the major jurisdictions in which Ambac and its affiliates operate and the earliest tax years subject to examination:
Jurisdiction |  | Tax Year |
United States |  |  | 2010 |
New York State |  |  | 2008 |
New York City |  |  | 2011 |
United Kingdom |  |  | 2006 |
Italy |  |  | 2007 |
Effective as of April 30, 2013, Ambac, the Creditors’ Committee, Ambac Assurance, the Segregated Account, OCI, and the Rehabilitator concluded a settlement with the United States Internal Revenue Service (“IRS”) and the Department of Justice of Ambac’s dispute with the IRS and related proceedings which included the following terms: (i) a payment by the Segregated Account of $100,000; (ii) a payment by Ambac of $1,900; (iii) the Ambac consolidated tax group relinquished its claim to all loss carry-forwards resulting from losses on credit default swap contracts and arising on or before December 31, 2010 to the extent such loss carry-forwards exceed $3,400,000 (the amount of the loss carry-forward relinquishment is $1,059,988); and (iv) paying the IRS 12.5% and 17.5% of certain payments to Ambac by Ambac Assurance under the intercompany tax sharing agreement (the “IRS Settlement”). Upon emergence from bankruptcy, approximately $816,380 of the NOL was reduced for cancellation of indebtedness income and reduction of interest expense pursuant to IRC Section 382 (l)(5). As of June 30, 2013 Ambac has an ordinary U. S. federal net operating tax carryforward of approximately $5,151,410, which if not utilized, will begin expiring in 2029 and will fully expire in 2034. The tax effects of temporary differences that give rise to significant portions of the deferred tax liabilities and deferred tax assets at June 30, 2013 and December 31, 2012 are presented below:
|  | Successor Ambac – June 30, 2013 |  |  | Predecessor Ambac – December 31, 2012 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Insurance intangible |  | $ | 567,564 |  |  | $ | — |
Variable interest entities |  |  | — |  |  |  | 22,015 |
Deferred acquisition costs |  |  | — |  |  |  | 57,262 |
Unearned premiums and credit fees |  |  | 6,165 |  |  |  | 22,714 |
Unrealized gains on investments |  |  | 4,041 |  |  |  | — |
Other |  |  | 1,907 |  |  |  | 17,251 |
Total deferred tax liabilities |  |  | 579,677 |  |  |  | 119,242 |
Deferred tax assets: |  |  |  |  |  |  |  |
Variable interest entities |  |  | 59,710 |  |  |  | — |
Unrealized losses & impairments on investments |  |  | — |  |  |  | 12,605 |
Net operating loss and capital carryforward |  |  | 2,137,334 |  |  |  | 2,857,926 |
Loss reserves |  |  | 833,823 |  |  |  | 490,677 |
Compensation |  |  | 7,876 |  |  |  | 7,184 |
Other |  |  | 3,012 |  |  |  | 5,687 |
Sub-total deferred tax assets |  |  | 3,041,755 |  |  |  | 3,374,079 |
Valuation allowance |  |  | 2,463,642 |  |  |  | 3,256,423 |
Total deferred tax assets |  |  | 578,113 |  |  |  | 117,656 |
Net deferred tax liability |  | $ | (1,564 | ) |  | $ | (1,586 | )
As a result of the potential development of additional losses and the related impact on the Company’s cash flows, management believes it is more likely than not that the Company will not generate sufficient taxable income to recover the deferred tax operating asset and therefore had a full valuation allowance.

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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 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 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 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: 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 6: 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 7: 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 8: 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. + Details
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