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DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
80
Due to the completion of the IRS audit for the Company's 2006-2008 federal income tax returns in August 2013, DPS recognized
a federal and state income tax benefit of $463 million primarily related to decreasing its liability for unrecognized tax benefits.
Additionally, in June 2013, a bill was enacted by the Canadian government, which reduced amounts amortized for income tax
purposes. As a result, DPS recognized $50 million of income tax expense for the reduction of tax assets. Refer to Note 13 for
additional information on the indemnity impact related to the conclusion of the IRS audit and the Canada amortization law change.
When combined with the associated impact to other expense, net as referred to in footnote 1 in the table above, these two events
decreased the Company's effective tax rate by 50.4% for the year ended December 31, 2013.
Deferred tax assets (liabilities) were comprised of the following as of December 31, 2014 and 2013 (in millions):
December 31, December 31,
2014 2013
Deferred income tax assets:
Deferred revenue $ 501 $ 530
Accrued liabilities 72 70
Pension and postretirement benefits 36 29
Net operating loss and credit carryforwards 22 24
Compensation 34 22
Inventory 410
Other 37 35
706 720
Deferred income tax liabilities:
Intangible assets and goodwill (1,116)(1,075)
Fixed assets (198)(204)
Other (21)(12)
(1,335)(1,291)
Valuation allowance (31)(33)
Net deferred income tax liability $(660)$(604)
As of December 31, 2014, the Company had $22 million in tax effected credit carryforwards and net operating loss
carryforwards. Net operating loss and credit carryforwards will expire in periods beyond the next five years.
The Company had a deferred tax valuation allowance of $31 million and $33 million as of December 31, 2014 and 2013,
respectively. A valuation allowance of $12 million relates to a foreign operation and was established as part of the separation
transaction. The remaining $19 million valuation allowance relates to foreign tax credits primarily generated in 2011. The Company
provided a full valuation allowance on the deferred tax asset related to the foreign tax credits as the Company does not believe
that the benefits will be realized in future years.