Cheniere Energy, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2011

Summary of Income Tax Contingencies [Table Text Block]

Changes in the balance of unrecognized tax benefits are as follows (in thousands):



Balance as January 1, 2011	$	20,969
Additions based on tax positions related to current year	115,073
Additions for tax positions of prior years	—
Reductions for tax positions of prior years	(693		)
Settlements	—
Balance at December 31, 2011	$	135,349

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

Income tax provision (benefit) included in our reported net loss consisted of the following (in thousands):



	Year Ended December 31,
	2011			2010		2009
Current:
Federal	$	—		$	—	$	—
State	—			—		—
Foreign	277			—		—
Total current	277			—		—

Deferred:
Federal	$	—		$	—	$	—
State	—			—		—
Foreign	(117		)	—		—
Total deferred	(117		)	—		—

Total income tax provision (benefit)	$	160		$	—	$	—

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

The reconciliation of the federal statutory income tax rate to our effective income tax rate is as follows:



	Year Ended December 31,
	2011		2010 ⁽¹⁾		2009 ⁽¹⁾
U.S. statutory tax rate	(35.0	)%	(35.0	)%	(35.0	)%
State tax benefit (net of federal benefits)	(6.2	)%	(9.2	)%	(7.1	)%
Foreign income tax provision	—	%	—	%	—	%
Deferred tax asset valuation reserve	42.1	%	26.0	%	42.6	%
Loss on early extinguishment of debt	—	%	17.8	%	—	%
Other	(0.9	)%	0.4	%	(0.5	)%
Effective tax rate as reported	—	%	—	%	—	%

(1) We have made certain changes in the classification and presentation of certain items. These changes do not affect the

disclosed effective tax rate.

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

Significant components of our deferred tax assets and liabilities at December 31, 2011 and 2010 are as follows (in thousands):



	Year Ended December 31,
	2011			2010
Deferred tax assets				(As Adjusted (1))
Net operating loss carryforwards ⁽²⁾
Federal	$	365,811		$	276,415
State	49,847			37,485
Capital gains	81,388			81,388
Share-based compensation expense	4,165			6,918
United Kingdom deferred tax assets	117			—
Other	19,565			7,290
Total deferred tax assets	$	520,893		$	409,496

Deferred tax liabilities
Investment in limited partnership	$	(79,281	)	$	(43,425	)
Other	(4,856		)	(12,952		)
Total deferred tax liabilities	$	(84,137	)	$	(56,377	)

Net deferred tax assets	436,756			353,119
Less: net deferred tax asset valuation allowance ⁽³⁾	(436,639		)	(353,119		)
	$	117		$	—


(1)	We have made changes to the disclosed 2010 share-based compensation gross deferred tax asset and the disclosed 2010 investment in limited partnership gross deferred tax liability, which had a corresponding change in the 2010 valuation allowance. These changes do not affect the 2010 disclosed net deferred tax asset.


(2)	The federal net operating loss ("NOL") carryforward expires between 2017 and 2031. The state NOL carryforward expires between 2020 and 2026.

(3) A valuation allowance equal to our U.S. and state net deferred tax asset balance has been established due to the uncertainty of realizing the tax benefits related to our U.S. and state net deferred tax assets. The change in the U.S. and state deferred tax asset valuation allowance is $83.5 million and $33.4 million for the years ended December 31, 2011 and 2010, respectively.

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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