Earthlink 2015 Annual Report Download - page 45

Table of Contents
Income tax (provision) benefit
The following table presents the components of our income tax (provision) benefit for the years ended December 31, 2013, 2014 and 2015 :
Year Ended December 31,
2013
2014
2015
(in thousands)
Current (provision) benefit $ 1,639
$ 5,335
$ (2,053)
Deferred (provision) benefit (212,870)
(591)
(677)
Total income tax (provision) benefit $ (211,231)
$ 4,744
$ (2,730)
During the year ended December 31, 2013, the current tax benefit was primarily related to the release of uncertain tax positions related to prior years, partially
offset by expense for Canadian tax amounts payable, current state taxes and penalties and interest related to uncertain tax positions. During the year ended
December 31, 2013, the non-cash deferred tax provision was due primarily to the recording of a valuation allowance against deferred tax assets (as further
described below). During the year ended December 31, 2014, the current tax benefit was primarily related to the release of uncertain tax positions related to prior
years, partially offset by expense for Canadian tax amounts payable, current year state taxes and penalties and interest related to uncertain tax positions. The non-
cash deferred tax expense was due primarily to the amortization of deferred tax liabilities with indefinite useful lives. During the year ended December 31, 2015,
the current tax provision was primarily related to the recording of an uncertain tax position, including applicable interest, related to certain tax positions that the
Company has taken during prior years, expense for Canadian tax amounts payable and current year state taxes. The non-cash deferred tax expense for the year
ended December 31, 2015 was due primarily to the amortization of deferred tax liabilities with indefinite useful lives.
The tax provision for the year ended December 31, 2013 includes a $266.3 million non-cash charge to record a valuation allowance against our deferred tax assets.
During the three months ended December 31, 2013, we entered into a three-year cumulative loss position. For purposes of assessing the realization of the deferred
tax assets, this cumulative loss position is considered significant negative evidence. Also during the three months ended December 31, 2013, management
reassessed its projections of future taxable income. This change in projections, coupled with its cumulative loss position caused management to modify its
assessment of the realizability of its deferred tax asset and conclude that a full valuation allowance, exclusive of our deferred tax liabilities with indefinite useful
lives and our capital loss carryforward, was necessary.
We assess the realization of the deferred tax assets each reporting period. To the extent that our financial results improve and the deferred tax assets becomes
realizable, we will reduce the valuation allowance through earnings. For more information about our income taxes, refer to Note 12 to our Consolidated Financial
Statements.
Loss from discontinued operations, net of tax
The operating results of the our telecom systems business acquired as part of ITC^DeltaCom have been separately presented as discontinued operations for all
periods presented. On August 2, 2013, we sold our telecom systems business. We have no significant continuing involvement in the operations or significant
continuing direct cash flows. The telecom systems results of operations were previously included in our legacy Business Services segment.
The following table presents summarized results of operations related to discontinued operations for the years ended December 31, 2013 and 2014:
Year Ended December 31,
2013
2014
(in thousands)
Revenues $ 6,141
$ 116
Operating costs and expenses (8,102)
(497)
Loss from discontinued operations, net of tax $ (1,961)
$ (381)
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