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## NOTE G — INCOME TAXES 

EMCOR files a consolidated federal income tax return including all its U.S. subsidiaries. At December 31, 2001, EMCOR had net operating loss carryforwards (“NOLs”) for U.S. income tax purposes of approximately $3.3 million, which expire in the year 2018. The NOLs are subject to review by the Internal Revenue Service. 

EMCOR adopted Fresh-Start Accounting in connection with EMCOR’s bankruptcy reorganization in December 1994. As a result, the tax benefit of any net operating loss carryforwards or net deductible temporary differences which existed as of December 15, 1994 will result in a charge to the tax provision (provision in lieu of income taxes) and a credit to capital surplus. Amounts credited to Capital surplus were $21.4 million, $24.4 million and $15.6 million for the years ended December 31, 2001, 2000 and 1999, respectively. 

The income tax provision in the accompanying Consolidated Statements of Operations for the years ended December 31, 2001, 2000 and 1999 consisted of the following (in thousands): 

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Factors accounting for the variation from U.S. statutory income tax rates relating to continuing operations for the years ended December 31, 2001, 2000 and 1999 were as follows (in thousands): 

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The components of the net deferred income tax asset are included in “Prepaid expenses and other” and “Other assets” at December 31, 2001 and the net deferred income tax liability is included in “Other accrued expenses and liabilities” at December 31, 2000 in the accompanying Consolidated Balance Sheets. The amounts recorded for the years ended December 31, 2001, and 2000 were as follows (in thousands): 

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