ServiceMagic 2014 Annual Report Download - page 79

IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest, is as follows:
The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the income tax provision. Included in the
income tax provision for continuing operations for the years ended December 31, 2014 , 2013 and 2012 is a $58.5 million benefit, $4.8 million
expense and $5.2 million expense, respectively, net of related deferred taxes of $35.3 million , $2.8 million and $3.1 million , respectively, for
interest on unrecognized tax benefits. Included in the income tax provision for discontinued operations for the years ended December 31, 2014 ,
2013 and 2012 is a $19.7 million benefit, $1.4 million expense and $2.8 million benefit, respectively, net of related deferred taxes of $11.7
million , $0.8 million and $1.7 million , respectively, for interest on unrecognized tax benefits. At December 31, 2014 and 2013 , the Company has
accrued $2.8 million and $133.0 million , respectively, for the payment of interest. At December 31, 2014 and 2013 , the Company has accrued
$2.9 million and $5.1 million , respectively, for penalties.
The Company is routinely under audit by federal, state, local and foreign authorities in the area of income tax. These audits include
questioning the timing and the amount of income and deductions and the allocation of income and deductions among various tax jurisdictions. The
Internal Revenue Service is currently auditing the Company’s federal income tax returns for the years ended December 31, 2010 through 2012.
Various other jurisdictions are open to examination for various tax years beginning with 2006. Income taxes payable include reserves considered
sufficient to pay assessments that may result from examination of prior year tax returns. Changes to reserves from period to period and differences
between amounts paid, if any, upon resolution of audits and amounts previously provided may be material. Differences between the reserves for
income tax contingencies and the amounts owed by the Company are recorded in the period they become known.
The statutes of limitations for federal income taxes for the years 2001 through 2009 expired on July 1, 2014. As a result, previously
unrecognized tax benefits, including interest, totaling $374.8 million were recognized in the third quarter of 2014. The income tax benefit to
continuing operations and discontinued operations was $88.2 million and $175.7 million , respectively. The remaining amount of $110.9 million
impacted various balance sheet accounts, primarily non-current deferred tax assets, which were reduced by $100.1 million . At December 31, 2014
and 2013 , unrecognized tax benefits, including interest, are $33.2 million and $408.8 million , respectively. If unrecognized tax benefits at
December 31, 2014 are subsequently recognized, $30.5 million , net of related deferred tax assets and interest, would reduce income tax provision
for continuing operations. The Company believes that it is reasonably possible that its unrecognized tax benefits could decrease by $8.8 million
within twelve months of the current reporting date primarily due to expirations of statutes of limitations; $8.4 million of which would reduce the
income tax provision for continuing operations.
63
December 31,
2014
2013 2012
(In thousands)
Balance at January 1
$
275,813
$
379,281
$
351,561
Additions based on tax positions related to the current year
2,159
2,887
6,278
Additions for tax positions of prior years
1,622
3,189
45,287
Reductions for tax positions of prior years
(5,611
)
(17,116
)
(17,545
)
Settlements
(5,092
)
(78,954
)
(5,349
)
Expiration of applicable statutes of limitations
(238,505
)
(13,474
)
(951
)
Balance at December 31
$
30,386
$
275,813
$
379,281