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DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
79
The provision (benefit) for income taxes has the following components (in millions):
For the Year Ended December 31,
2014 2013 2012
Current:
Federal $ 259 $(211) $ 215
State 49 (58) 32
Non-U.S. 20 50 11
Total current provision (benefit) 328 (219) 258
Deferred:
Federal 36 95 72
State 110 10
Non-U.S. 633 9
Total deferred provision 43 138 91
Total provision (benefit) for income taxes $ 371 $(81) $ 349
The following is a reconciliation of the provision for income taxes computed at the U.S. federal statutory tax rate to the
provision (benefit) for income taxes reported in the Consolidated Statements of Income (in millions):
For the Year Ended December 31,
2014 2013 2012
Statutory federal income tax of 35% $ 375 $ 190 $ 342
Completion of 2006-2008 IRS audit —(463) —
Canada amortization law change —50 —
Impact of non-taxable indemnity income/non-tax deductible indemnity
expense(1) —137 —
State income taxes, net 32 34 35
U.S. federal domestic manufacturing benefit (26) (23) (21)
Impact of non-U.S. operations (14) (7) (9)
Indemnified taxes(2) —5 8
Other 4(4) (6)
Total provision (benefit) provision for income taxes $ 371 $ (81) $ 349
Effective tax rate 34.6% (14.9)% 35.7%
____________________________
(1) Due to the resolution of the 2006-2008 IRS audit and the Canada amortization law change in 2013, the Company recognized
indemnity expense, net of $392 million as a result of the Tax Sharing and Indemnification Agreement ("Tax Indemnity
Agreement"). Since the indemnity expense is not deductible for income tax purposes, the benefit for income taxes also included
a permanent difference of $137 million.
(2) Amounts represent tax expense recorded by the Company for which was obligated to indemnify DPS under the
Tax Indemnity Agreement but excludes the amounts with respect to the completion of the 2006-2008 IRS audit and the Canada
amortization law change as they are separately shown on the rate reconciliation.
The effective tax rates for the year ended December 31, 2014 and 2013 were 34.6% and (14.9)%, respectively. The primary
reason for the change in the tax rates was the conclusion of an IRS audit and a Canadian law change as described below.