ServiceMagic 2014 Annual Report Download - page 46

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Table of Contents
income tax provision for continuing operations and discontinued operations for the year ended December 31, 2013 is a $4.8 million expense and a
$1.4 million expense, respectively, net of related deferred taxes, for interest on unrecognized tax benefits. At December 31, 2014 and 2013, the
Company has accrued $2.8 million and $133.0 million , respectively, for the payment of interest. At December 31, 2014 and 2013, the Company
has accrued $2.9 million and $5.1 million , respectively, for penalties.
The Company is routinely under audit by federal, state, local and foreign authorities in the area of income tax. These audits include
questioning the timing and the amount of income and deductions and the allocation of income and deductions among various tax jurisdictions. The
Internal Revenue Service is currently auditing the Company’s federal income tax returns for the years ended December 31, 2010 through 2012.
Various other jurisdictions are open to examination for various tax years beginning with 2006. Income taxes payable include reserves considered
sufficient to pay assessments that may result from examination of prior year tax returns. Changes to reserves from period to period and differences
between amounts paid, if any, upon the resolution of audits and amounts previously provided may be material. Differences between the reserves for
income tax contingencies and the amounts owed by the Company are recorded in the period they become known.
The statutes of limitations for federal income taxes for the years 2001 through 2009 expired on July 1, 2014. As a result, previously
unrecognized tax benefits, including interest, totaling $374.8 million were recognized in the third quarter of 2014. The income tax benefit to
continuing operations and discontinued operations was $88.2 million and $175.7 million , respectively. The remaining amount of $110.9 million
impacted various balance sheet accounts, primarily non-current deferred tax assets, which were reduced by $100.1 million . At December 31, 2014
and 2013, the Company has unrecognized tax benefits, including interest, of $33.2 million and $408.8 million , respectively. If unrecognized tax
benefits at December 31, 2014 are subsequently recognized, $30.5 million, net of related deferred tax assets and interest, would reduce income tax
provision for continuing operations. The Company believes that it is reasonably possible that its unrecognized tax benefits could decrease by $8.8
million within twelve months of the current reporting date primarily due to expirations of statutes of limitations; $8.4 million of which would
reduce the income tax provision for continuing operations.
Earnings (loss) from discontinued operations, net of tax
Earnings from discontinued operations, net of tax in 2014 increased from 2013 principally due to the release of tax reserves as a result of the
expiration of the statutes of limitations for federal income taxes for the years 2001 through 2009.
33
Years Ended December 31,
2014
$ Change
% Change
2013
$ Change
% Change
2012
(Dollars in thousands)
Earnings (loss) from
discontinued operations, net of
tax
$
174,673
NM
NM
$
1,926
NM
NM
$
(9,051
)