Yahoo 2015 Annual Report Download - page 66

Income Taxes
The benefit for income taxes for the year ended December 31, 2015 differs from the amount
computed by applying the federal statutory income tax rate to income before benefit for income
taxes and earnings in equity interests as follows (dollars in thousands):
Years Ended December 31,
2013 (*) 2014 (*) 2015 (*)
Income tax at the U.S. federal
statutory rate of 35 percent(4)(5) $ 221,648 35% $3,679,333 35% $(1,688,496) 35%
State income taxes, net of federal
benefit 23,000 4% 400,824 4% (7,912) 0%
Stock-based compensation expense 16,015 3% 8,132 0% 9,508 0%
Research tax credits(1) (18,036) (3)% (23,775) 0% (15,659) 0%
Effect of non-U.S. operations(2) (47,968) (8)% (53,079) (1)% 165,203 (3)%
Settlement with tax authorities(3) (46,943) (7)% (24,870) 0% (1,981) 0%
Remeasurement of prior year tax
positions (24,246) (4)% — 0% (5,286) 0%
Acquisition related non-deductible
expenses 9,296 1% 16,881 0% 15,970 0%
Tax liquidation of acquired entities — 0% — 0% (56,170) 1%
Goodwill impairment charge(5) 22,244 3% 30,945 0% 1,486,792 (31)%
Intangible impairment charge — 0% — 0% 2,468 0%
Other (1,618) 0% 3,711 0% 5,965 0%
Provision (benefit) for income taxes $ 153,392 24% $4,038,102 38% $ (89,598) 2%
(*) Percent of income before income taxes and earnings in equity interests.
Significant variances year-over-year as shown above are further explained as follows:
(1) On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law retroactively
extending the federal research and development credit for amounts paid or incurred after
December 31, 2011 and before January 1, 2014. As such, the provision for income taxes for the
year ended December 31, 2013 reflects the benefit of both the 2012 and 2013 federal research
and development tax credits. On December 19, 2014, the Tax Increase Prevention Act of 2014
was signed into law, extending this 2014 federal research and development credit. As such, the
provision for income taxes for the year ended December 31, 2014 reflects the benefit of the 2014
federal research and development tax credit. On December 18, 2015, the Protecting Americans
from Tax Act of 2015 was signed into law, extending 2015 federal research and development
credit. As such, the provision for income taxes for the year ended December 31, 2015 reflects
the benefit of the 2015 federal research and development tax credit.
(2) In 2013, “effect of non-U.S. operations” includes an additional benefit of $36 million due to more
excess foreign tax credits becoming available as certain tax matters were resolved with various
tax authorities during the year. In 2014, a detriment of $8 million was included in “effect of non-
U.S. operations” to account for the corresponding adjustments from the IRS on foreign earnings
available at the time of 2012 repatriation in which we made a one-time distribution of cash from
certain of our consolidated foreign subsidiaries. In 2015, the tax effect of our non-U.S.
operations is a detriment. This results primarily from our election to deduct foreign taxes for
U.S. tax purposes rather than claim a tax credit.
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