American Home Shield 2015 Annual Report Download - page 89

Table of Contents
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The components of income (loss) from continuing operations before income taxes are as follows:
Year Ended December 31,
(In millions) 2015 2014 2013
U.S. $ 266 $ 79 $ 80
Foreign 4 5 6
Income from Continuing Operations before Income Taxes $ 270 $ 84 $ 86
The reconciliation of income tax computed at the U.S. federal statutory tax rate to the Company’s effective income tax rate
for continuing operations is as follows:
Year Ended December 31,
2015 2014 2013
Tax at U.S. federal statutory rate 35.0 % 35.0 % 35.0 %
State and local income taxes, net of U.S. federal benefit 3.2 12.3 9.6
Tax credits (0.8) (3.1) (2.6)
Other permanent items 2.4 1.8 0.8
Stock option forfeitures — 1.6 4.2
Other, including foreign rate differences and reserves — 0.6 3.1
Effective rate 39.8 % 48.2 % 50.1 %
The effective tax rate for discontinued operations for the years ended December 31, 2015, 2014 and 2013 was a tax benefit of
37.7 percent, 38.1 percent and 23.3 percent, respectively. The effective tax rate for the year ending December 31, 2013 was impacted
by the impairment of non-deductible goodwill.
Income tax expense from continuing operations is as follows:
Year Ended December 31,
(In millions ) 2015 2014 2013
Current:
U.S. federal $ 33 $ — $ 1
Foreign 2 3 3
State and local 12 9 5
47 11 9
Deferred:
U.S. federal 59 27 27
Foreign — — —
State and local 1 2 7
60 29 33
Provision for income taxes $ 107 $ 40 $ 43
On December 18, 2015, the President signed into law the Protecting Americans from Tax Hikes Act of 2015, which
retroactively extended the number of tax deductions and credits that otherwise would have expired. This legislation did not have a
significant impact on our total income tax expense.
Deferred income tax expense results from timing differences in the recognition of income and expense for income tax and
financial reporting purposes. Deferred income tax balances reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting and income tax purposes. The deferred tax asset primarily reflects the impact of
future tax deductions related to the Company’s accruals and certain net operating loss carryforwards. The deferred tax liability is
primarily attributable to the basis differences related to intangible assets. Valuation allowances are recorded to reduce deferred tax
assets when it is more likely than not that a tax benefit will not be realized. The valuation allowance for deferred tax assets as of
December 31, 2015 was $7 million.
2015 Annual Report 87