CHS 2013 Annual Report Download - page 43

We have total loss carry forwards of $146.8 million, of We file income tax returns in the U.S. federal jurisdiction,
which $81.4 million will expire over periods ranging from and various state and foreign jurisdictions. Our uncer-
fiscal 2014 to fiscal 2024. NCRA’s gross state tax credit tain tax positions are affected by the tax years that are
carry forwards for income tax are approximately under audit or remain subject to examination by the
$88.1 million and $99.5 million as of August 31, 2013, and relevant taxing authorities. In addition to the current
2012, respectively. During the year ended August 31, 2013, year, fiscal 2006 through 2012 remain subject to exami-
the valuation allowance for NCRA decreased by $4.0 mil- nation, at least for certain issues.
lion due to a change in the amount of state tax credits
that are estimated to be utilized. NCRA’s valuation allow- We account for our income tax provisions in accordance
ance is necessary due to the limited amount of taxable with ASC 740, Income Taxes, which prescribes a min-
income it generates on an annual basis. Based on esti- imum threshold that a tax provision is required to meet
mates of future taxable profits and losses in certain for- before being recognized in our consolidated financial
eign tax jurisdictions, we determined that a valuation statements. This interpretation requires us to recognize
allowance was required for specific foreign loss carry for- in our consolidated financial statements tax positions
wards as of August 31, 2013. If these estimates prove inac- determined more likely than not to be sustained upon
curate, a change in the valuation allowance, up or down, examination, based on the technical merits of the posi-
could be required in the future. During fiscal 2013, foreign tion. Reconciliation of the gross beginning and ending
loss tax valuation allowances increased by $26.1 million. amounts of unrecognized tax benefits for the periods
presented follows:
Our foreign tax credit of $7.0 million will expire on (DOLLARS IN THOUSANDS) 2013 2012 2011
August 31, 2019. Our general business credits of Balance at beginning of period $ 67,271 $ 67,271 $ 69,357
$39.0 million, comprised primarily of low sulfur diesel
Reductions attributable to
credits, will begin to expire on August 31, 2027. statute expiration (2,086)
Balance at end of period $ 67,271 $ 67,271 $ 67,271
As of August 31, 2013, net deferred taxes of $39.3 million
and $458.8 million were included in other current assets
and other liabilities, respectively. As of August 31, 2012, If we were to prevail on all tax positions taken relating to
net deferred taxes of $37.6 million and $309.7 million uncertain tax positions, substantially all of the unrecog-
were included in other current assets and other liabili- nized tax benefits would benefit the effective tax rate.
ties, respectively. We do not believe it is reasonably possible that the total
amounts of unrecognized tax benefits will significantly
The reconciliation of the statutory federal income tax increase or decrease during the next 12 months.
rates to the effective tax rates for the years ended
August 31, 2013, 2012 and 2011 is as follows: We recognize interest and penalties related to unrecog-
nized tax benefits in our provision for income taxes. For
2013 2012 2011 the years ended August 31, 2013, 2012 and 2011, we rec-
Statutory federal income tax rate 35.0% 35.0% 35.0% ognized in our Consolidated Statements of Operations
$0.2 million, $0.2 million and $0.1 million, respectively,
State and local income taxes, net
of federal income tax benefit 0.9 0.5 1.3 for interest related to unrecognized tax benefits. We
recorded interest payable related to unrecognized tax
Patronage earnings (22.9) (24.2) (20.5)
benefits on our Consolidated Balance Sheets of
Domestic production activities
$0.6 million and $0.4 million, as of August 31, 2013 and
deduction (8.5) (3.5) (3.2)
2012, respectively.
Export activities at rates other
than the U.S. statutory rate 0.6 0.4 0.5
Valuation allowance 2.3 0.6 0.9
Tax credits (0.5) (1.3) (3.1)
Non-controlling interests (0.1) (1.9) (3.0)
Other 1.5 0.1 (0.4)
Effective tax rate 8.3% 5.7% 7.5%
48 CHS 2013
EIGHT: Income Taxes, continued