Yahoo 2014 Annual Report Download - page 72

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We may have additional tax liabilities in China related to the sale to Alibaba Group of 523 million
Alibaba Group shares that took place during the year ended December 31, 2012 and related to the
sale of 140 million Alibaba Group ADSs sold in the IPO that took place during the year ended
December 31, 2014. Any taxes assessed and paid in China are expected to be ultimately offset and
recovered in the U.S. through the use of foreign tax credits with respect to the sale in 2012. Any taxes
assessed and paid in China are expected to be ultimately offset and recovered in the U.S. with
respect to the sale in 2014 through the use of foreign tax credits to the extent there is sufficient
foreign source income.
Tax authorities from the Brazilian State of Sao Paulo have assessed certain indirect taxes against our
Brazilian subsidiary, Yahoo! do Brasil Internet Ltda., related to online advertising services. The
assessment totaling approximately $120 million is for calendar years 2008 through 2011. We currently
believe the assessment is without merit. We believe the risk of loss is remote and have not recorded
an accrual for the assessment.
Earnings in Equity Interests
We record our share of the results of earnings in equity interests, including tax impacts, one quarter
in arrears, within earnings in equity interests in the consolidated statements of income. Earnings in
equity interests for the year ended December 31, 2014 were approximately $1,058 million, compared
to $897 million and $676 million for 2013 and 2012, respectively. Earnings in equity interests
increased during the years ended December 31, 2013 and 2014, compared to each of 2012 and 2013,
respectively, primarily due to continued improved financial performance for Alibaba Group. For 2014,
this increase was offset in part by a significant decline in earnings in equity interests during the fourth
quarter of 2014 because, following Alibaba Group’s IPO in September 2014, we no longer account for
our interest in Alibaba Group using the equity method. Since we no longer use the equity method to
account for our interest in Alibaba Group, our earnings in equity interests and net income will also be
materially lower in future periods.
See “Significant Transactions—Alibaba Group Holding Limited Initial Public Offering” above and
Note 8—“Investments in Equity Interests Accounted for Using the Equity Method of Accounting” in
the Notes to our consolidated financial statements for additional information.
Noncontrolling Interests
Noncontrolling interests represent the noncontrolling holders’ percentage share of income or losses
from the subsidiaries in which we hold a majority, but less than 100 percent, ownership interest and
the results of which are consolidated in our consolidated financial statements. Noncontrolling
interests were approximately $10 million in 2014, compared to $10 million in 2013 and $5 million in
2012. Noncontrolling interests recorded in 2014, 2013, and 2012 were related to the Yahoo!7 venture
in Australia and New Zealand.
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