Humana 2007 Annual Report Download - page 90

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Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
9. INCOME TAXES
The provision for income taxes consisted of the following for the years ended December 31, 2007, 2006 and
2005:
2007 2006 2005
(in thousands)
Current provision:
Federal ................................. $452,286 $192,878 $127,653
States and Puerto Rico ..................... 36,066 11,722 17,504
Total current provision ................. 488,352 204,600 145,157
Deferred benefit .............................. (32,736) 70,062 (39,007)
Provision for income taxes .............. $455,616 $274,662 $106,150
The provision for income taxes was different from the amount computed using the federal statutory rate for
the years ended December 31, 2007, 2006 and 2005 due to the following:
2007 2006 2005
(in thousands)
Income tax provision at federal statutory rate ....... $451,255 $266,730 $141,008
States, net of federal benefit and Puerto Rico ....... 23,377 18,301 13,169
Tax exempt investment income .................. (20,254) (15,713) (11,917)
Capital loss valuation allowance ................. — — (5,198)
Contingent tax reserves (benefits) ................ — 1,570 (27,365)
Examination settlements ....................... — — (3,518)
Other, net ................................... 1,238 3,774 (29)
Provision for income taxes .................. $455,616 $274,662 $106,150
The $27.4 million reduction in 2005 tax expense primarily related to the recognition of a $22.8 million
contingent tax benefit and associated $3.1 million reversal of accrued interest resulting from the resolution of an
uncertain tax position associated with the 2000 tax year during the first quarter of 2005 in connection with the
expiration of the statute of limitations.
Changes in the capital loss valuation allowance in 2005 resulted from our regular evaluation of probable
capital gain realization in the allowable carryforward period given our recent and historical capital gain
experience and the consideration of alternative tax planning strategies. The capital loss carryforward expired on
December 31, 2005. As such, the remaining unused deferred tax asset and associated allowance were written off.
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