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DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
79
The (benefit) provision for income taxes attributable to continuing operations has the following components (in millions):
For the Year Ended December 31,
2013 2012 2011
Current:
Federal $(211)$ 215 $ 686
State (58)32 114
Non-U.S. 50 11 18
Total current provision (219)258 818
Deferred:
Federal 95 72 (425)
State 10 10 (83)
Non-U.S. 33 9 10
Total deferred provision 138 91 (498)
Total (benefit) provision for income taxes $(81)$ 349 $ 320
The following is a reconciliation of provision for income taxes computed at the U.S. federal statutory tax rate to the
(benefit) provision for income taxes reported in the Consolidated Statements of Income (in millions):
For the Year Ended December 31,
2013 2012 2011
Statutory federal income tax of 35% $ 190 $ 342 $ 324
Completion of 2006-2008 IRS audit (463)— —
Canada amortization law change 50 — —
Impact of non-taxable indemnity income/non-tax deductible indemnity
expense(1) 137 — —
State income taxes, net 34 35 25
U.S. federal domestic manufacturing benefit (23)(21)(30)
Impact of non-U.S. operations (7)(9)(5)
Indemnified taxes(2) 58 11
Other (4)(6)(5)
Total (benefit) provision for income taxes $(81)$ 349 $ 320
Effective tax rate (14.9)% 35.7% 34.6%
____________________________
(1) Due to the resolution of the 2006-2008 IRS audit and the Canada amortization law change in 2013, the Company recognized
indemnity expense, net of $392 million as a result of the Tax Sharing and Indemnification Agreement ("Tax Indemnity
Agreement"). Since the indemnity expense is not deductible for income tax purposes, the benefit for income taxes also included
a permanent difference of $137 million.
(2) Amounts represent tax expense recorded by the Company for which was obligated to indemnify DPS under the
Tax Indemnity Agreement but excludes the amounts with respect to the completion of the 2006-2008 IRS audit and the Canada
amortization law change as they are separately shown on the rate reconciliation.
The effective tax rates for the year ended December 31, 2013 and 2012 were (14.9)% and 35.7%, respectively. The primary
reason for the changes in the tax rates was the conclusion of an IRS audit and a Canadian law change as described below.