HR Block 2006 Annual Report Download - page 132
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The following table reconciles our federal statutory rate of 35% to our The net change in the total valuation allowance for fiscal years 2006
effective tax rate: and 2005 was $5.5 million and $(2.9) million, respectively. The valuation
allowance for deferred tax assets as of April 30, 2006 was $25.8 million.
Year Ended April 30, 2006 2005 2004
We believe the net deferred tax asset at April 30, 2006 of
Statutory tax rate 35.0% 35.0% 35.0%
$233.4 million is more likely than not realizable. We have federal taxable
Increases in income tax rate resulting from:
income in excess of approximately $1.7 billion and substantial state
State income taxes, net of Federal income
taxable income in the carry-back period.
tax benefit 3.7% 3.7% 3.6%
As of April 30, 2006, we had net operating loss carryforwards for tax
Other 2.0% – % 1.2%
purposes in various states and foreign countries of approximately
Effective tax rate 40.7% 38.7% 39.8%
$297.3 million. If not used, these carryforwards will expire in varying
The components of deferred taxes are as follows: amounts during fiscal years 2007 through 2025.
(in 000s)
We intend to indefinitely reinvest foreign earnings, therefore, a provision
April 30, 2006 2005
has not been made for income taxes that might be payable upon remittance
Gross deferred tax assets:
of such earnings. Moreover, due to the availability of foreign income tax
Accrued expenses $ 63,058 $ 53,006
credits, management believes the amount of federal income taxes would be
Allowance for credit losses and related reserves 46,192 35,116
immaterial in the event foreign earnings were repatriated.
Net operating losses –3,524
Current 109,250 91,646
Residual interest income 146,348 129,323
Deferred and stock-based compensation 91,030 61,111
Property and equipment 43,513 33,767
Deferred revenue 57,836 –
Net operating losses 16,471 20,018
Other 394 –
Noncurrent 355,592 244,219
464,842 335,865
Valuation allowance (25,816) (20,354)
439,026 315,511
Gross deferred tax liabilities:
Prepaid expenses and revenue deferred for tax (16,037) (13,454)
Current (16,037) (13,454)
Mortgage servicing rights (101,621) (61,190)
Intangible assets (87,992) (101,945)
Noncurrent (189,613) (163,135)
Net deferred tax assets $ 233,376 $ 138,922
62
H&R BLOCK 2006 Form 10K