America Online 2014 Annual Report Download - page 109

AOL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The components of the provision for income tax expense provided on income from continuing operations
were as follows (in millions):
Years Ended December 31,
2014 2013 2012
U.S. federal
Current ....................................................... $ 8.2 $ 31.5 $ 22.4
Deferred ...................................................... 49.1 42.9 110.8
Foreign
Current ....................................................... 2.9 3.1 4.0
Deferred ...................................................... 5.4 2.6 (2.4)
State and local
Current ....................................................... (0.1) 7.0 11.9
Deferred ...................................................... 7.7 6.0 15.7
Total ............................................................. $ 73.2 $ 93.1 $ 162.4
Included in Federal deferred expense is expense related to federal net operating loss and credit carryforward
utilization of $42.0 million.
The items accounting for the difference between income tax expense computed at the federal statutory rate
of 35% and the provision for income taxes were as follows:
Years Ended December 31,
2014 2013 2012
U.S. federal statutory rate .............................................. 35.0% 35.0% 35.0%
State and local taxes, net of U.S. federal tax benefits ......................... 3.4 4.5 1.8
Change in valuation allowance .......................................... 3.3 13.8 34.2
Effect of non-U.S. operations ........................................... (0.6) (5.6) (1.0)
Non-deductible goodwill ............................................... — 3.3 —
Unrecognized tax benefits .............................................. 4.1 1.4 0.1
Gain/loss on sale of assets .............................................. 0.3 — (57.5)
Non-deductible acquisition related costs .................................. 1.5 0.8 0.5
Federal research credit ................................................ (12.2) (6.3) —
Non-U.S. deferred gain charge .......................................... 1.0 2.4 0.2
Other .............................................................. 1.5 1.4 0.1
Total .............................................................. 37.3% 50.7% 13.4%
During the three months ended December 31, 2014, the Company completed an analysis of its federal
research and development credit, resulting in an additional benefit of approximately $8.8 million, which is net of
unrecognized tax benefits of $3.8 million, for tax years 2010 through 2013. The additional benefit associated
with tax years 2010 through 2013 is the result of a change in estimate. On December 19, 2014, the Tax Increase
Prevention Act of 2014 was signed into law. Under this act, the federal research and development credit was
retroactively extended for amounts paid or incurred after December 31, 2013 and before January 1, 2015. The
effects of this change in the tax law have resulted in an additional tax benefit of approximately $7.3 million,
which is net of unrecognized tax benefits of $3.2 million, recognized in the fourth quarter of 2014 at the time the
law was enacted.
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