Walgreens 2015 Annual Report Download - page 106
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The provision for income taxes consists of the following (in millions):
2015 2014 2013
Current provision
Federal $ 846 $1,207 $1,122
State 121 109 134
Non – U.S. 128 35 15
1,095 1,351 1,271
Deferred provision
Federal (23) 183 228
State (16) (3) (2)
Non – U.S. — (5) 2
(39) 175 228
Income tax provision $1,056 $1,526 $1,499
The difference between the statutory federal income tax rate and the effective tax rate is as follows:
2015 2014 2013
Federal statutory rate 35.0% 35.0% 35.0%
State income taxes, net of federal benefit 1.3 1.9 2.2
Loss on Alliance Boots call option(1) — 8.5 —
Deferred tax asset recognition(1) (4.1) — —
Gain on previously held equity interest (5.8) — —
Foreign income taxed at non-U.S. rates (6.2) (3.1) (0.3)
Non-taxable income (2.6) — —
Non-deductible expenses 2.3 0.3 1.0
Other — 0.3 (0.9)
Effective income tax rate 19.9% 42.9% 37.0%
(1) Upon the amendment and immediate exercise of the call option to acquire the remaining 55% ownership of
Alliance Boots, the Company was required to compare the fair value of the amended option with the book
value of the original option with a gain or loss recognized for the difference. The fair value of the amended
option resulted in a financial statement loss of $866 million. The loss on the Alliance Boots call option was,
in part, a capital loss and available to be carried forward and offset future capital gains through fiscal 2020.
The loss was also the primary contributor to the 2014 valuation allowance amount reported in the deferred
income tax table below. In 2015, the deferred tax asset related to the loss was recognized, resulting in the
4.1% effective tax rate benefit reported in the table above as well as a reduction to the valuation allowance
amount reported in the deferred income tax table below.
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