Yahoo 2006 Annual Report Download - page 94

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stock for each Note. The Notes will also be convertible into shares of Yahoo! common stock in subsequent fiscal
quarters, if any, with respect to which the market price condition for convertibility is met.
As of December 31, 2006, the fair value of the Notes was approximately $1.0 billion based on quoted market prices.
The shares issuable upon conversion of the Notes have been included in the computation of diluted net income per
share since the Notes were issued.
Note 10 INCOME TAXES
The components of income before income taxes, earnings in equity interests and minority interests are as follows (in
thousands):
2004 2005 2006
Years Ended December 31,
United States .................................. $1,172,480 $2,047,284 $1,002,673
Foreign
(*)
..................................... 12,544 496,298 95,327
Income before income taxes, earnings in equity
interests and minority interests . . . .............. $1,185,024 $2,543,582 $1,098,000
(*)
Includes non-cash gains of $338 million and $15 million in 2005 and 2006, respectively, related to the divestiture of Yahoo! China in
connection with the Alibaba transaction (see Note 4 — “Investments in Equity Interests”). The majority of the tax on the gain was
provided in the United States as the gain was not taxable in any foreign jurisdiction.
The provision (benefit) for income taxes is composed of the following (in thousands):
2004 2005 2006
Years Ended December 31,
Current:
United States federal .............................. $409,969 $508,175 $ 595,967
State .......................................... 83,632 184,296 68,348
Foreign ........................................ 17,782 42,625 68,129
Total current provision for income taxes .............. 511,383 735,096 732,444
Deferred:
United States federal .............................. (62,620) 37,058 (221,204)
State .......................................... (8,580) 4,996 (23,403)
Foreign ........................................ (2,217) (9,334) (29,826)
Total deferred provision (benefit) for income taxes ...... (73,417) 32,720 (274,433)
Provision for income taxes.......................... $437,966 $767,816 $ 458,011
84
Yahoo! Inc.
Notes to Consolidated Financial Statements — (Continued)