Income Taxes	9 Months Ended
Sep. 30, 2014
Income Taxes
Income Taxes	7. Income Taxes As a part of the overall Spin-Off transaction, certain assets that were transferred by us to Theravance Biopharma resulted in taxable transfers pursuant to Section 367 of the Internal Revenue Code of 1986, as amended (the “Code”), or other applicable provisions of the Code and Treasury Regulations. The taxable gain attributable to the transfer of the certain assets to Theravance Biopharma was the excess of the fair market value of each asset transferred over our adjusted tax basis in such asset. The U.S. federal income and state tax gain on transfer of the assets to Theravance Biopharma was approximately $0.4 billion and $0.1 billion. This taxable income is expected to be substantially offset by current year losses and our net operating loss carryforwards from prior years resulting in a net impact of zero to income tax expense. As a result of the Spin-Off, we reversed approximately $0.1 billion of our valuation allowance on certain deferred tax assets, primarily federal net operating losses, as of September 30, 2014. Our ability to utilize net operating losses is dependent upon the change in control provisions in Section 382 of the Code. We are preparing a study of the potential limitation under Section 382 as of December 31, 2013. While a formal update of the study has not been completed, we believe that we will not have limitations on the use of our net operating losses under Section 382 for the purposes of computing our income tax payable for the year ended December 31, 2014. As a result of our history of prior year losses and lack of available evidence supporting future taxable income, we believe that a valuation allowance on our remaining deferred tax assets as of September 30, 2014 remains appropriate. In addition, we also transferred gross deferred tax assets of approximately $9 million with the corresponding full valuation allowance to Theravance Biopharma as a result of the Spin-Off because the underlying tax benefits have been transferred to Theravance Biopharma.

Income Taxes

9 Months Ended

Sep. 30, 2014

7. Income Taxes

As a part of the overall Spin-Off transaction, certain assets that were transferred by us to Theravance Biopharma resulted in taxable transfers pursuant to Section 367 of the Internal Revenue Code of 1986, as amended (the “Code”), or other applicable provisions of the Code and Treasury Regulations. The taxable gain attributable to the transfer of the certain assets to Theravance Biopharma was the excess of the fair market value of each asset transferred over our adjusted tax basis in such asset. The U.S. federal income and state tax gain on transfer of the assets to Theravance Biopharma was approximately $0.4 billion and $0.1 billion. This taxable income is expected to be substantially offset by current year losses and our net operating loss carryforwards from prior years resulting in a net impact of zero to income tax expense.

As a result of the Spin-Off, we reversed approximately $0.1 billion of our valuation allowance on certain deferred tax assets, primarily federal net operating losses, as of September 30, 2014. Our ability to utilize net operating losses is dependent upon the change in control provisions in Section 382 of the Code. We are preparing a study of the potential limitation under Section 382 as of December 31, 2013. While a formal update of the study has not been completed, we believe that we will not have limitations on the use of our net operating losses under Section 382 for the purposes of computing our income tax payable for the year ended December 31, 2014. As a result of our history of prior year losses and lack of available evidence supporting future taxable income, we believe that a valuation allowance on our remaining deferred tax assets as of September 30, 2014 remains appropriate. In addition, we also transferred gross deferred tax assets of approximately $9 million with the corresponding full valuation allowance to Theravance Biopharma as a result of the Spin-Off because the underlying tax benefits have been transferred to Theravance Biopharma.