UPS 2015 Annual Report Download - page 58

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
46
Our effective tax rate is affected by recurring factors, such as statutory tax rates in the jurisdictions we operate in and the
relative amounts of taxable income we earn in those jurisdictions. It is also affected by discrete items that may occur in any
given year but are not consistent from year to year. See note 13 to the audited consolidated financial statements for a more
complete description of the significant recurring and discrete items affecting our effective tax rate. As described in the Items
Affecting Comparability section, certain items have been excluded from comparisons of "adjusted" income taxes in the
discussion that follows.
2015 compared to 2014
Our adjusted effective tax rate decreased to 34.0% in 2015 from 35.5% in 2014 primarily due to favorable discrete tax
adjustments related to: (1) prior years' deferred tax balances; (2) execution of advance pricing agreements with certain foreign
tax jurisdictions; (3) resolution of several U.S. state and local tax matters; and (4) the extension of several previously expired
U.S. tax provisions in 2015. These benefits were partially offset by the additional U.S. tax expense associated with a cash
distribution from a Canadian subsidiary to its U.S. parent.
2014 compared to 2013
Our adjusted effective tax rate increased slightly to 35.5% in 2014 from 35.4% in 2013 due to a decrease in U.S. Federal
and state tax credits relative to total pre-tax income, which was largely offset by favorable changes in the proportion of our
taxable income in certain U.S. and non-U.S. jurisdictions relative to total pre-tax income.