Yahoo 2005 Annual Report Download - page 91
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85
The provision (benefit) for income taxes is composed of the following (in thousands):
Years Ended December 31,
2003 2004 2005
Current:
United States federal $121,758 $409,969 $508,175
State 25,584 83,632 184,296
Foreign 14,589 17,782 42,625
Total current provision for income taxes 161,931 511,383 735,096
Deferred:
United States federal (13,276) (62,620 ) 37,058
State (1,631) (8,580 ) 4,996
Foreign — (2,217 ) (9,334)
Total deferred provision (benefit) for income taxes (14,907) (73,417 ) 32,720
Provision for income taxes $147,024 $437,966 $767,816
The provision for income taxes differs from the amount computed by applying the federal statutory income
tax rate to income before income taxes as follows (in thousands):
Years Ended December 31,
2003 2004 2005
Income tax at the United States federal statutory rate of 35 percent $ 120,112 $ 414,758 $ 890,254
State income taxes, net of federal benefit 15,184 49,920 113,685
Change in valuation allowance 8,516 (40,612 ) 16,342
Capital loss on subsidiary restructuring transaction (1)
— — (248,284)
Other 3,212 13,900 (4,181)
Provision for income taxes $ 147,024 $ 437,966 $ 767,816
(1) During 2005, the Company completed a taxable liquidation of a subsidiary. The transaction gave rise to a capital loss for tax
purposes, resulting in a tax benefit of approximately $248 million.
Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The
components of deferred income tax assets and liabilities are as follows (in thousands):
December 31,
2004 2005
Deferred income tax assets:
Net operating loss and tax credit carryforwards $ 1,436,144 $ 1,277,269
Non-deductible reserves and expenses 406,488 445,355
Gross deferred income tax assets 1,842,632 1,722,624
Valuation allowance (1,353,748 ) (1,507,848)
Realizable deferred income tax assets $ 488,884 $ 214,776
Deferred income tax liabilities:
Unrealized investment gains $ (315,274 ) $ —
Purchased intangible assets (197,794 ) (211,446)
Investments in equity interests — (131,927)
Other (7,629 ) (38,100)
Gross deferred income tax liabilities $ (520,697 ) $ (381,473)
Net deferred income tax liabilities $ (31,813 ) $ (166,697)