Polaris 2014 Annual Report Download - page 89

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Components of Polaris’ provision for income taxes for continuing operations are as follows (in thousands):
For the Years Ended December 31,
2014 2013 2012
Current:
Federal .................................. $255,299 $167,690 $169,833
State .................................... 20,438 12,942 15,366
Foreign .................................. 21,584 15,457 8,593
Deferred .................................... (52,033) (2,729) (26,259)
Total provision for income taxes for continuing operations $245,288 $193,360 $167,533
Reconciliation of the Federal statutory income tax rate to the effective tax rate is as follows:
For the Years Ended
December 31,
2014 2013 2012
Federal statutory rate ................................... 35.0% 35.0% 35.0%
State income taxes, net of federal benefit ..................... 1.5 1.5 1.8
Domestic manufacturing deduction ......................... (1.1) (1.0) (1.5)
Research and development tax credit ........................ (1.1) (2.2) —
Valuation allowance for foreign subsidiaries net operating losses .... —0.3 —
Other permanent differences .............................. 0.8 0.1 (0.4)
Effective income tax rate for continuing operations ............. 35.1% 33.7% 34.9%
In December 2014, the President of the United States signed the Tax Increase Prevention Act, which
retroactively reinstated the research and development tax credit for 2014. In January 2013, the President of
the United States signed the American Taxpayers Relief Act of 2012, which reinstated the research and
development tax credit. As a result, the impact of both the 2012 and 2013 research and development tax
credits were recorded in the 2013 tax provision.
Undistributed earnings relating to certain non-U.S. subsidiaries of approximately $105,782,000 and $75,487,000
at December 31, 2014 and 2013, respectively, are considered to be permanently reinvested; accordingly, no
provision for U.S. federal income taxes has been provided thereon. If the Company were to distribute these
earnings, it would be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits
reflecting the amounts paid to non-U.S. taxing authorities) and withholding taxes payable to the non-U.S.
countries. Determination of the unrecognized deferred U.S. income tax liability related to these undistributed
earnings is not practicable due to the complexities associated with this hypothetical calculation.
Polaris utilizes the liability method of accounting for income taxes whereby deferred taxes are determined
based on the estimated future tax effects of differences between the financial statement and tax bases of assets
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