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, 2012

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



	Year Ended December 31,
	2012			2011
Balance at beginning of the year	$	135,349		$	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	(115,576		)	(693		)
Settlements	—			—
Balance at end of the year	$	19,773		$	135,349

Schedule of Components of Income Tax Expense (Benefit)

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



	Year Ended December 31,
	2012			2011			2010
Current:
Federal	$	—		$	—		$	—
State	—			—			—
Foreign	145			277			—
Total current	145			277			—

Deferred:
Federal	—			—			—
State	—			—			—
Foreign	(141		)	(117		)	—
Total deferred	(141		)	(117		)	—
Total income tax provision	$	4		$	160		$	—

Schedule of Effective Income Tax Rate Reconciliation

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



	Year Ended December 31,
	2012		2011		2010 ⁽¹⁾
U.S. statutory tax rate	(35.0	)%	(35.0	)%	(35.0	)%
State tax benefit (net of federal benefits)	(2.7	)%	(6.2	)%	(9.2	)%
Foreign income tax provision	—	%	—	%	—	%
Deferred tax asset valuation reserve	33.2	%	42.1	%	26.0	%
Loss on early extinguishment of debt	—	%	—	%	17.8	%
Other	4.5	%	(0.9	)%	0.4	%
Effective tax rate as reported	—	%	—	%	—	%

Schedule of Deferred Tax Assets and Liabilities

Significant components of our deferred tax assets and liabilities at December 31, 2012 and 2011 are as follows (in thousands):



	Year Ended December 31,
	2012			2011
Deferred tax assets
Net operating loss carryforwards ⁽¹⁾
Federal	$	476,228		$	365,811
State	83,242			49,847
Capital gains	81,388			81,388
Share-based compensation expense	5,679			4,165
United Kingdom deferred tax assets	258			117
Other	17,606			19,565
Total deferred tax assets	$	664,401		$	520,893

Deferred tax liabilities
Investment in limited partnership	$	(94,434	)	$	(79,281	)
Other	(307		)	(4,856		)
Total deferred tax liabilities	$	(94,741	)	$	(84,137	)

Net deferred tax assets	569,660			436,756
Less: net deferred tax asset valuation allowance ⁽²⁾	(569,402		)	(436,639		)
Total net deferred tax asset	$	258		$	117


(1)

- 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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