ServiceMagic 2009 Annual Report Download - page 83

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Table of Contents
IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 4—INCOME TAXES (Continued)
A reconciliation of the income tax provision (benefit) to the amounts computed by applying the statutory federal income tax rate to (loss)
earnings from continuing operations before income taxes is shown as follows (in thousands):
No federal and state income taxes have been provided on permanently reinvested earnings of certain foreign subsidiaries aggregating
$68.2 million at December 31, 2009. The amount of the unrecognized deferred U.S. income tax liability with respect to such earnings is
$14.5 million.
75
Years Ended December 31,
2009
2008
2007
Income tax (benefit) provision at the federal statutory rate of
35%
$
(338,636
)
$
32,719
$
(1,431
)
State income taxes, net of effect of federal tax benefit
403
(13,795
)
(343
)
Foreign income taxed at a different statutory tax rate
(182
)
(6,398
)
(1,064
)
Non
-
deductible impairment of IAC Search & Media
315,886
—
—
Non
-deductible goodwill associated with the sale of Match
Europe
9,175
—
—
Non
-
deductible non
-
cash compensation expense
157
96
1,373
Equity in income of foreign unconsolidated affiliates
—
—
(
6,083
)
Tax exempt income
(1,148
)
(2,400
)
(3,649
)
Net adjustment related to the reconciliation of income tax
provision (benefit) accruals to tax returns, net of effect of
federal tax benefit
(439
)
(2,245
)
1,350
Effect of change in estimated state tax rate
787
(39,456
)
(1,476
)
Change in tax reserves, net of effect of federal, state and
foreign tax benefits
14,622
12,500
13,774
Federal tax credits for research activities
(1,061
)
(1,039
)
(2,033
)
Non
-
taxable gains on derivatives
—
(
191
)
(2,035
)
Non
-
deductible expenses related to the Spin
-
Off
—
8,727
1,147
Non
-
deductible expenses
2,588
3,453
1,892
Change in federal valuation allowance on investments in
unconsolidated affiliates
1,446
9,522
762
Foreign tax credits
(5,200
)
(11,608
)
—
Reversal of deferred tax liability associated with investment in
Ticketmaster
—
(
48,695
)
—
Establishment of valuation allowance on deferred tax assets
distributed to Tree.com
—
23,685
—
Other, net
3,087
(2,572
)
137
Income tax provision (benefit)
$
1,485
$
(37,697
)
$
2,321