Income Taxes (Tables)

12 Months Ended

Dec. 31, 2011

Income Tax Disclosure [Abstract]

Components of income tax expense (benefit)

An analysis of the income tax benefit (provision) attributable to loss from continuing operations before income taxes for each of the years in the three year period ended December 31, 2011 follows:

	2011			2010			2009
	(dollars in millions)
Current:
United States federal	$	—		$	—		$	—
State	—			(1		)	—
Foreign	(8		)	—			—
	(8		)	(1		)	—
Deferred, net of changes in valuation allowances:
United States federal	(30		)	—			—
State	(1		)	—			(1		)
Foreign	(2		)	92			—
Income tax benefit (provision)	$	(41	)	$	91		$	(1	)

Schedule of income before income tax, domestic and foreign

The United States and foreign components of loss from continuing operations before income taxes are as follows:

	2011			2010			2009
	(dollars in millions)
United States	$	(692	)	$	(542	)	$	(519	)
Foreign	(94		)	(170		)	(104		)
	$	(786	)	$	(712	)	$	(623	)

Schedule of effective income tax rate reconciliation

A reconciliation of the actual income tax benefit (provision) and the tax computed by applying the U.S. federal rate (35%) to the loss before income taxes for each of the years in the three-year period ended December 31, 2011 follows:

	2011			2010			2009
	(dollars in millions)
Computed tax benefit at statutory rate	$	275		$	250		$	218
Effect of earnings in jurisdictions outside of US	(13		)	(13		)	—
Foreign branch tax benefit	17			21			—
State income tax benefit	24			24			20
Change in valuation allowance	(198		)	(175		)	(255		)
Permanent items	(44		)	(16		)	(4		)
Non-cash compensation excess deductions	(18		)	—			—
Indefinite-lived assets	(26		)	—			—
NOL expiration	(38		)	—			—
Other, net	(20		)	—			20
Income tax benefit (provision)	$	(41	)	$	91		$	(1	)

Deferred tax assets and liabilities

The components of the net deferred tax assets (liabilities) as of December 31, 2011 and 2010 were as follows:

	2011			2010
	(dollars in millions)
Deferred Tax Assets:
Accrued payroll and related benefits	$	101		$	77
Deferred revenue	276			285
Unutilized tax net operating loss carry forwards	3,996			2,713
Fixed assets and intangible assets	157			38
Intercompany loss	164			—
Other	193			100
Total Deferred Tax Assets	4,887			3,213
Deferred Tax Liabilities:
Fixed assets and intangible assets	(542		)	(79		)
Deferred revenue	(93		)	—
Other	(51		)	(29		)
Foreign branch income	(40		)	(40		)
Total Deferred Tax Liabilities	(726		)	(148		)
Net Deferred Tax Assets before valuation allowance	4,161			3,065
Valuation Allowance	(4,252		)	(2,978		)
Net Deferred Tax (Liability) Asset after Valuation Allowance	$	(91	)	$	87
Balance sheet classification of deferred taxes:
Net current deferred income tax asset	$	12		$	—
Net current deferred income tax liability	(3		)	—
Net non-current deferred income tax asset	246			87
Net non-current deferred income tax liability	(346		)	—
Net Deferred Tax (Liability) Asset after Valuation Allowance	$	(91	)	$	87

Operating loss carryforwards

The U.S. federal tax loss carry forwards expire as follows (dollars in millions):

Expiring December 31,	Amount
2024	$	533
2025	1,186
2026	1,029
2027	1,508
2028	445
2029	700
2030	703
2031	687
	$	6,791

Uncertain tax benefits

A reconciliation of the beginning and ending balance of unrecognized tax benefits follows:

(dollars in millions)	Amount
Balance as of December 31, 2008	$	7
Gross increases—tax positions prior to 2009	—
Gross decreases—settlements with taxing authorities	(2		)
Balance as of December 31, 2009	5
Gross increases—tax position prior to 2010	1
Balance as of December 31, 2010	6
Gross increases—Global Crossing tax positions of prior years	11
Gross decreases - tax positions of prior years	(1		)
Gross decreases - settlement with taxing authorities	(1		)
Balance as of December 31, 2011	$	15