ServiceMagic 2011 Annual Report Download - page 80

IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 4—INCOME TAXES (Continued)
No U.S. federal or state income taxes have been provided on permanently reinvested earnings of certain foreign subsidiaries aggregating
$353.2 million at December 31, 2011. The amount of the unrecognized deferred U.S. federal and state income tax liability with respect to such
earnings is $92.7 million.
A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest, is as follows:
At December 31, 2011 and 2010, unrecognized tax benefits, including interest, were $462.8 million and $487.6 million, respectively. The
total unrecognized tax benefits as of December 31, 2011 include $12.3 million that have been netted against the related deferred tax assets. The
remaining balance of $450.5 million is reflected in "non-current income taxes payable" in the accompanying consolidated balance sheet at
December 31, 2011. Unrecognized tax benefits for the year ended December 31, 2011 decreased by $38.3 million due principally to the
expiration of statutes of limitations, the effective settlement of audits and a net decrease in deductible temporary differences. Included in
unrecognized tax benefits at December 31, 2011 is $88.5 million relating to tax positions for which the ultimate deductibility is highly certain
but for which there is uncertainty about the timing of such deductibility. If unrecognized tax benefits as of December 31, 2011 are subsequently
recognized, $89.5 million and $213.6 million, net of related deferred tax assets and interest, would reduce income tax expense from continuing
operations and discontinued operations, respectively. If unrecognized tax benefits as of December 31, 2010 are subsequently recognized,
$103.1 million and $206.9 million, net of related deferred tax assets and interest, would reduce income tax expense from continuing operations
and discontinued operations, respectively. In addition, a continuing operations tax provision of $5.1 million would be required upon the
subsequent recognition of unrecognized tax benefits for an increase in the Company's valuation allowance against certain deferred tax assets.
The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in income tax provision. Included in
income tax provision for continuing operations for the years ended December 31, 2011, 2010 and 2009 is a $1.4 million expense, $9.1 million
expense and $8.3 million expense, respectively, net of related deferred taxes of $0.9 million, $5.8 million and $5.5 million, respectively, for
interest on unrecognized tax benefits. Included in income tax provision for discontinued operations for the years ended December 31, 2011, 2010
and 2009 is a $6.7 million expense, $7.0 million expense and $3.7 million expense, respectively, net of related deferred taxes of $4.2 million,
$4.4 million and $2.5 million, respectively, for interest on unrecognized tax benefits. At
74
December 31,
2011 2010 2009
(In thousands)
Balance at January 1
$
389,909
$
394,294
$
372,633
Additions based on tax positions related to
the current year
1,749
3,060
2,333
Additions for tax positions of prior years
9,560
9,897
35,432
Reductions for tax positions of prior years
(26,595
)
(13,164
)
(14,991
)
Settlements
(16,810
)
(1,025
)
(1,113
)
Expiration of applicable statute of
limitations
(6,252
)
(3,153
)
—
Balance at December 31
$
351,561
$
389,909
$
394,294