ServiceMagic 2012 Annual Report Download - page 73

IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
No income taxes have been provided on indefinitely reinvested earnings of certain foreign subsidiaries aggregating $402.2 million at
December 31, 2012 . The amount of the unrecognized deferred income tax liability with respect to such earnings is $93.3 million .
A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest, is as follows:
At December 31, 2012 and 2011 , unrecognized tax benefits, including interest, are $496.8 million and $462.8 million , respectively. The
total unrecognized tax benefits at December 31, 2012 include $14.5 million that have been netted against the related deferred tax assets. Of the
remaining balance, $468.2 million is reflected in "non-current income taxes payable" and $ 14.1 million is reflected in "accrued expenses and
other current liabilities" in the accompanying consolidated balance sheet at December 31, 2012 . Unrecognized tax benefits, including interest,
for the year ended December 31, 2012 increased by $34.0 million due principally to a net increase in deductible timing differences and additions
for tax positions related to prior years. Included in unrecognized tax benefits at December 31, 2012 is $75.7 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 at December 31, 2012 are subsequently recognized, $110.8 million and $222.3 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 at
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.
The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in income tax provision. Included in the
income tax provision for continuing operations for the years ended December 31, 2012 , 2011 and 2010 is a $5.2 million expense, $1.4 million
expense and $9.1 million expense, respectively, net of related deferred taxes of $3.1 million , $0.9 million and $5.8 million , respectively, for
interest on unrecognized tax benefits. Included in income tax
58
Years Ended December 31,
2012
2011 2010
(In thousands)
Income tax provision at the federal statutory rate of 35%
$
101,172
$
60,033
$
7,940
Reversal of deferred tax liability associated with investment in Meetic
—
(
43,696
)
—
Change in tax reserves, net
17,703
(15,493
)
8,696
Foreign income taxed at a different statutory tax rate
(16,240
)
(11,774
)
(4,957
)
Net adjustment related to the reconciliation of income tax provision accruals to tax
returns
(3,876
)
(7,298
)
(38
)
Federal valuation allowance on equity method investments
979
4,595
2,420
State income taxes, net of effect of federal tax benefit
7,650
5,592
5,310
Foreign tax credits
—
(
1,076
)
(5,255
)
Non-deductible impairments of goodwill and intangible assets
—
—
13,661
Other, net
11,827
5,070
4,302
Income tax provision (benefit)
$
119,215
$
(4,047
)
$
32,079
December 31,
2012
2011 2010
(In thousands)
Balance at January 1
$
351,561
$
389,909
$
394,294
Additions based on tax positions related to the current year
6,278
1,749
3,060
Additions for tax positions of prior years
45,287
9,560
9,897
Reductions for tax positions of prior years
(17,545
)
(26,595
)
(13,164
)
Settlements
(5,349
)
(16,810
)
(1,025
)
Expiration of applicable statute of limitations
(951
)
(6,252
)
(3,153
)
Balance at December 31
$
379,281
$
351,561
$
389,909