MoneyGram 2013 Annual Report Download - page 113

Table of Contents
At the end of 2013, capital losses on the 2008 security sales expired, resulting in offsetting decreases to tax loss carryover, deferred tax assets
and valuation allowance. Changes in facts and circumstances in the future may cause the Company to record additional tax benefits as further
deferred tax valuation allowances are released and carry-forwards are utilized.
The following table is a summary of the amounts and expiration dates of tax loss carry-forwards (not tax effected) and credit carry-
forwards as
of December 31, 2013 :
The Company, or one of its subsidiaries, files income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. With
a few exceptions, the Company is no longer subject to foreign or U.S. federal, state and local income tax examinations for years prior to 2005.
The Company is subject to foreign, U.S. federal and certain state income tax examinations for 2005 through 2012.
The IRS has completed its examination of the Company’
s consolidated income tax returns through 2009. The IRS issued a Notice of Deficiency
for 2005-
2007 in April 2012 and a Notice of Deficiency for 2009 in October 2012. The Company filed petitions with the U.S. Tax Court in May
2012 and December 2012 contesting adjustments in the 2005-
2007 and 2009 Notices of Deficiency, respectively, related to the security losses.
In August 2012, the IRS also issued an Examination Report for 2008. The IRS issued Notices of Deficiency disallowing among other items
approximately $900.0 million
of deductions on securities losses in the 2007, 2008 and 2009 tax returns. As of December 31, 2013, the IRS and
the Company have reached a partial settlement on $186.9 million
of deductions in dispute. The Company has recognized a cumulative benefit of
$139.9 million relating to these deductions as of December 31, 2013
. The Company continues to believe that the amounts recorded in its
consolidated financial statements reflect its best estimate of the ultimate outcome of this matter.
Unrecognized tax benefits are recorded in “Accounts payable and other liabilities”
in the Consolidated Balance Sheets. The following table is a
summary is a reconciliation of unrecognized tax benefits for the years ended December 31 :
As of December 31, 2013 , the liability for unrecognized tax benefits was $52.0 million
, all of which could impact the effective tax rate if
recognized. The Company accrues interest and penalties for unrecognized tax benefits through “Income tax expense (benefit)”
in the
Consolidated Statements of Operations. For the years ended December 31, 2013 , 2012 and 2011 , the Company accrued approximately
$1.1
million , $0.7 million and $0.2 million
, respectively, in interest and penalties in its Consolidated Statements of Operations, respectively. As of
December 31, 2013 and 2012 , the Company had a liability of $2.1 million and $2.0 million
, respectively, for interest and penalties related to its
unrecognized tax benefits. As of December 31, 2013
, it is not possible to reasonably estimate the expected change to the total amount of
unrecognized tax positions over the next 12 months .
The Company does not consider its earnings in its foreign entities to be permanently reinvested. As of December 31, 2013 and 2012
, a deferred
tax liability of $7.6 million and $5.6 million , respectively, was recognized for the unremitted earnings of its foreign entities.
F-42
(Amounts in millions) Expiration
Date
Amount
U.S. capital loss carry-forwards 2014 -
2018
$
182.0
U.S. federal tax credit carry-forwards
Indefinite
$
27.6
(Amounts in millions) 2013
2012 2011
Beginning balance
$
51.6
$
9.6
$
10.2
Additions based on tax positions related to prior years
0.9
1.6
—
Additions based on tax positions related to current year —
40.8
—
Lapse in statute of limitations
(0.5
)
(0.4
)
(0.5
)
Reductions for tax positions of prior years — — (
0.1
)
Ending balance
$
52.0
$
51.6
$
9.6