UPS 2015 Annual Report Download - page 124
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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
112
In the fourth quarter of 2015, we recognized an income tax benefit of $39 million related to pre-tax mark-to-market losses
of $118 million on our pension and postretirement defined benefit plans. This income tax benefit was generated at a lower
average statutory tax rate than our U.S. federal statutory tax rate because it was due, in part, to non-U.S. benefit plans.
Other favorable rate impacting items in 2015 include: resolution of several U.S. state and local tax matters; the extension
of favorable U.S. federal tax provisions associated with the Protecting Americans from Tax Hikes Act of 2015 related to
research and development tax credits and work opportunity tax credits; and the execution of two bilateral advance pricing
agreements. These agreements established intercompany transfer pricing arrangements between the U.S. and certain non-U.S.
jurisdictions related to our small package operations for tax years 2010 through 2019.
2014 Discrete Items
In 2014, we recorded a $415 million tax benefit related to a pre-tax charge of $1.102 billion for certain health and welfare
plan changes (see note 5). This income tax benefit was generated at a higher average statutory tax rate than our U.S. federal
statutory tax rate because it included the effect of U.S. state and local taxes.
In the fourth quarter of 2014, we recognized an income tax benefit of $392 million related to pre-tax mark-to-market
losses of $1.062 billion on our pension and postretirement defined benefit plans. This income tax benefit was generated at a
higher average statutory tax rate than the U.S. federal statutory tax rate because it included the effect of U.S. state and local
taxes.
Other Items
Beginning in 2012, we were granted a tax incentive for certain of our non-U.S. operations, which is effective through
December 31, 2017 and may be extended through December 31, 2022 if additional requirements are satisfied. The tax incentive
is conditional upon our meeting specific employment and investment thresholds. The impact of this tax incentive decreased
non-U.S. tax expense by $25, $21 and $20 million for 2015, 2014, and 2013, respectively.