HR Block 2009 Annual Report Download - page 64

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The components of income tax expense (benefit) for continuing operations are as follows:
Year Ended April 30, 2009 2008 2007
(in 000s)
Current:
Federal $ 243,085 $ 196,676 $ 240,688
State 38,418 54,096 35,332
Foreign 1,393 16,901 7,388
282,896 267,673 283,408
Deferred:
Federal 36,739 48,788 (28,117)
State 6,582 (27,471) (26)
Foreign 98 134 2,536
43,419 21,451 (25,607)
Total income taxes for continuing operations $ 326,315 $ 289,124 $ 257,801
The reconciliation between the income tax provision and the amount computed by applying the statutory
federal tax rate of 35% to income taxes of continuing operations is as follows:
Year Ended April 30, 2009 2008 2007
U.S. statutory tax rate 35.0% 35.0% 35.0%
Change in tax rate resulting from:
State income taxes, net of
federal income tax benefit 4.2% 5.0% 3.6%
Permanent differences 1.6% 0.7% (0.1%)
FIN 48 liabilities 0.5% 2.9% – %
Net decrease in valuation allowance (1.2%) (3.7%) – %
Other (1.2%) (0.6%) 2.6%
Effective tax rate 38.9% 39.3% 41.1%
The significant components of deferred tax assets and liabilities of continuing operations are reflected in the
following table:
April 30, 2009 2008
(in 000s)
Gross deferred tax assets:
Accrued expenses $ 49,239 $ 78,618
Allowance for credit losses and related reserves 179,508 154,320
Net operating loss carryovers 5,495 8,771
Other 2,119 2,523
Valuation allowance (4,773) –
Current 231,588 244,232
Deferred and stock-based compensation 65,493 88,797
Property and equipment 5,743 34,180
Deferred revenue 39,489 40,339
Basis difference in mortgage-related investment 18,288 40,394
Net operating loss carryovers 27,315 36,829
Accrued expenses 42,291 12,914
Capital loss carryover 145,572 2,300
Other 6,480 2,383
Valuation allowance (160,642) (36,929)
Noncurrent 190,029 221,207
421,617 465,439
Gross deferred tax liabilities:
Prepaid expenses (5,607) (6,580)
Current (5,607) (6,580)
Intangibles (105,366) (78,685)
Noncurrent (105,366) (78,685)
Net deferred tax assets $ 310,644 $ 380,174
60 H&R BLOCK 2009 Form 10K