America Online 2015 Annual Report Download - page 20

Provision for Income Taxes
(dollars in millions)
Increase/(Decrease)
Years Ended December31, 2015 2014 2013 2015 vs. 2014 2014 vs. 2013
Provision for income taxes $ 9,865 $ 3,314 $ 5,730 $ 6,551 nm $ (2,416) (42.2)%
Effective income tax rate 34.9% 21.7% 19.6%
nm - not meaningful
The effective income tax rate is calculated by dividing the provision
forincome taxes by income before the provision for income taxes.
Theeffective income tax rate for 2015 was 34.9% compared to 21.7%
for 2014. The increase in the effective income tax rate and provision
forincome taxes was primarily due to the impact of higher income
before income taxes due to severance, pension and benefit credits
recorded in 2015 compared to severance, pension and benefit
charges recorded in 2014, as well as tax benefits associated with the
utilization of certain tax credits in 2014 in connection with the Omnitel
Transaction. The 2014 effective income tax rate also included a benefit
from the inclusion of income attributable to Vodafone’s noncontrolling
interest in the Verizon Wireless partnership prior to the Wireless
Transaction completed on February 21, 2014.
The effective income tax rate for 2014 was 21.7% compared to 19.6%
for 2013. The increase in the effective income tax rate was primarily
due to additional income taxes on the incremental income from the
Wireless Transaction completed on February21, 2014 and was partially
offset by the utilization of certain tax credits in connection with the
Omnitel Transaction in 2014 and the effective income tax rate impact
of lower income before income taxes due to severance, pension and
benefit charges recorded in 2014 compared to severance, pension
and benefit credits recorded in 2013. The decrease in the provision
for income taxes was primarily due to lower income before income
taxes due to severance, pension and benefit charges recorded in 2014
compared to severance, pension and benefit credits recordedin 2013.
Our effective income tax rate differed significantly from the statutory
federal income tax rate for 2013 due to the inclusion of income attrib-
utable to Vodafone’s noncontrolling interest in the Verizon Wireless
partnership for the full year within our income before the provision
for income taxes. In 2013, we recorded a tax provision on income
before the provision for income taxes and when we included the
income attributable to Vodafone’s noncontrolling interest in the Verizon
Wireless partnership in our income before the provision for income
taxes it resulted in our effective income tax rate being 13.7percentage
points lower during 2013.
A reconciliation of the statutory federal income tax rate to the effective
income tax rate for each period is included in Note12 to the consoli-
dated financial statements.
Net Income Attributable to Noncontrolling Interests
(dollars in millions)
Increase/(Decrease)
Years Ended December31, 2015 2014 2013 2015 vs. 2014 2014 vs. 2013
Net income attributable to noncontrolling
interests $ 496 $ 2,331 $ 12,050 $ (1,835) (78.7)% $ (9,719) (80.7)%
The decrease in Net income attributable to noncontrolling interests during 2015 and 2014 was primarily due to the completion of the Wireless
Transaction on February21, 2014. As a result, our results reflect our 55% ownership interest of Verizon Wireless through the closing of the
Wireless Transaction and reflect our full ownership of Verizon Wireless for the remainder of the year. The noncontrolling interests that remained
after the completion of the Wireless Transaction primarily relate to wireless partnership entities.
18 Verizon Communications Inc. and Subsidiaries
Management’s Discussion and Analysis ofFinancialCondition and Results of Operations continued