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76 H&R Block 2013 Form 10-K
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, 2013 2012 2011
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 4.0 % 4.2 % 4.4 %
Permanent differences (0.1)% 0.5 % (0.6)%
Uncertain tax positions (4.1)% (0.6)% 1.2 %
Net change in valuation allowance (1.0)% 0.2 % (1.4)%
Other (0.1)% 0.6 % (1.1)%
Effective tax rate 33.7 % 39.9 % 37.5 %
The net loss from discontinued operations for fiscal years 2013 and 2012 totaled $31.2 million and $80.0 million,
respectively, compared to net income of $13.6 million in fiscal year 2011. These amounts are net of tax benefits of
$19.7 million and $74.9 million in fiscal years 2013 and 2012, respectively, and tax expense of $13.8 million in fiscal
year 2011. The effective tax rate for discontinued operations was 38.6%, 48.4% and 50.5% for fiscal years 2013, 2012
and 2011, respectively.
The significant components of deferred tax assets and liabilities are reflected in the following table:
(in 000s)
As of April 30, 2013 2012
Gross deferred tax assets:
Accrued expenses $15,842 $21,533
Allowance for credit losses and related reserves 114,570 102,819
Capital loss carry-forward 45,826 —
Valuation allowance (28,088) (33,672)
Current 148,150 90,680
Deferred and stock-based compensation 20,758 23,590
Deferred revenue 30,225 26,181
Net operating loss carry-forward 20,070 18,202
State tax benefits related to federal unrecognized tax benefits 30,374 31,824
Capital loss carry-forward 2,379 85,778
Other 3,901 2,901
Valuation allowance (26,525) (43,771)
Noncurrent 81,182 144,705
229,332 235,385
Gross deferred tax liabilities:
Prepaid expenses (2,830) (3,641)
Current (2,830) (3,641)
Property and equipment (25,794) (19,454)
Mortgage-related investment (20,033) (63,115)
Intangibles (36,565) (33,935)
Noncurrent (82,392) (116,504)
Net deferred tax assets $ 144,110 $115,240
As of April 30, 2013 and 2012, we have deferred tax assets related to capital loss carry-forwards totaling $48.2
million and $85.8 million, respectively, which resulted primarily from the sale of our brokerage business in November
2008. Generally, for tax purposes, a capital loss can only be utilized to the extent we realize capital gains within five
years of the end of the taxable year in which the capital loss was incurred. We have recorded a valuation allowance