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16. INCOME TAXES
ÌýÌýÌýÌýÌýÌýÌýÌýWe use the asset and liability method of accounting for income taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial and tax reporting purposes. We evaluate deferred tax assets to determine whether it is more likely than not that they will be realized. Valuation allowances are reviewed on a tax jurisdiction basis to analyze whether there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets for each jurisdiction. During the nine months ended SeptemberÌý30, 2011, we released valuation allowances of $8Ìýmillion on certain net deferred tax assets in Luxembourg. During the nine months ended SeptemberÌý30, 2010, we released a valuation allowance of $14Ìýmillion on certain net deferred tax assets in Australia.
ÌýÌýÌýÌýÌýÌýÌýÌýDuring the nine months ended SeptemberÌý30, 2011, we recorded no net change in unrecognized tax benefits and during the nine months ended SeptemberÌý30, 2010 we recorded a net decrease in unrecognized tax benefits with a corresponding income tax benefit of $6Ìýmillion, resulting from the settlement of tax audits, the effective settlement of certain tax positions and the expiration of statutes of limitations, net of current year additions.
ÌýÌýÌýÌýÌýÌýÌýÌýDuring the nine months ended SeptemberÌý30, 2011, we recorded approximately $2Ìýmillion of tax benefit on the approximately $160Ìýmillion of restructuring, impairment and plant closing costs attributable to the significant restructuring of our Textile Effects and Advanced Materials business segments. The majority of these restructuring expenses relate to operations in Switzerland where we have a full valuation allowance on our net deferred tax assets.
HUNTSMAN CORPORATION
ÌýÌýÌýÌýÌýÌýÌýÌýIn addition to the tax benefits resulting from the valuation allowance release and restructuring costs and the tax effects resulting from the unrecognized tax benefit items discussed above, during the nine months ended SeptemberÌý30, 2011 and 2010 we recognized $2Ìýmillion and $17Ìýmillion of tax benefit, respectively, on the $5Ìýmillion and $169Ìýmillion of loss on early extinguishment of debt (the majority of the 2010 loss is not deductible for tax purposes). Excluding these items, we recorded income tax expense of $123Ìýmillion and $83Ìýmillion for the nine months ended SeptemberÌý30, 2011 and 2010, respectively. Our tax obligations are affected by the mix of income and losses in the tax jurisdictions in which we operate.
HUNTSMAN INTERNATIONAL
ÌýÌýÌýÌýÌýÌýÌýÌýIn addition to the tax benefits resulting from the valuation allowance release and restructuring costs and the tax effects resulting from the unrecognized tax benefit items discussed above, during the nine months ended SeptemberÌý30, 2011 and 2010 ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International recognized $2Ìýmillion and $9Ìýmillion of tax benefit, respectively, on the $5Ìýmillion and $23Ìýmillion of loss on early extinguishment of debt. Excluding these items, ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International recorded income tax expense of $123Ìýmillion and $85Ìýmillion for the nine months ended SeptemberÌý30, 2011 and 2010, respectively. Our tax obligations are affected by the mix of income and losses in the tax jurisdictions in which we operate.
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