HR Block 2014 Annual Report Download - page 78

70 2014 Form 10-K | H&R Block, Inc.
The significant components of deferred tax assets and liabilities are reflected in the following table:
(in 000s)
As of April 30, 2014 2013
Gross deferred tax assets:
Accrued expenses $ 34,052 $ 15,842
Allowance for credit losses and related reserves 115,145 114,570
Capital loss carry-forward —45,826
Valuation allowance (10,837) (28,088)
Current 138,360 148,150
Deferred and stock-based compensation 21,348 20,758
Deferred revenue 8,090 30,225
Net operating loss carry-forward 21,434 20,070
Federal tax benefits related to state unrecognized tax benefits 28,601 30,374
Capital loss carry-forward —2,379
Other 9,861 3,901
Valuation allowance (8,339) (26,525)
Noncurrent 80,995 81,182
219,355 229,332
Gross deferred tax liabilities:
Prepaid expenses (3,033) (2,830)
Current (3,033) (2,830)
Property and equipment (28,610) (25,794)
Mortgage-related investment (15,441) (20,033)
Intangibles (59,881) (36,565)
Noncurrent (103,932) (82,392)
Net deferred tax assets $ 112,390 $ 144,110
Our valuation allowance on deferred tax assets decreased $35.4 million from $54.6 million at April 30, 2013, to
$19.2 million at April 30, 2014. The decrease in the valuation allowance related almost entirely to deferred tax assets
for capital loss carry-forwards totaling $45.8 million at April 30, 2013, which were fully realized during the fiscal year
ended April 30, 2014.
During 2014 we determined we would not implement a previously identified qualified tax-planning strategy for
which we had expected to implement and realized a tax benefit in a prior period. Our decision to abandon this tax
planning strategy resulted in an increase to our valuation allowance and income tax expense of $9.2 million.
Additionally, we made an election on our U.S. income tax return to treat a transfer of ownership of an international
subsidiary to a consolidated affiliate in a manner which resulted in recognizing a capital gain for income tax purposes.
No gain or loss was recorded for financial reporting purposes upon this transfer of ownership. As a result of this
transaction we reduced deferred tax assets for capital loss carry-forwards and corresponding valuation allowances to
zero, with no impact to income tax expense or our effective tax rate.
Certain of our subsidiaries file stand-alone returns in various states and foreign jurisdictions, and others join in
filing consolidated or combined returns in such jurisdictions. As of April 30, 2014, we had net operating losses (NOLs)
in various states and foreign jurisdictions. The amount of state NOLs vary by taxing jurisdiction. We maintain a deferred
tax asset of $21.4 million for the tax effects of such losses and a valuation allowance of $15.1 million for the portion
of such losses that, more likely than not, will not be realized. If not used, the NOLs will expire in varying amounts
during fiscal years 2015 through 2033.