Yahoo 2015 Annual Report Download - page 68

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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 Alibaba Group 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.
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 is for calendar years 2008 through 2011 and as of December 31, 2015 totals approximately
$92 million. 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 operations.
The following table presents earnings in equity interests for the periods presented (dollars in
thousands):
Years Ended December 31,
2013 2014 2015
Earnings in equity interests
$ 896,675 $ 1,057,863 $ 383,571
The decrease for the year ended December 31, 2015, compared to 2014, was due primarily to the
change in accounting for our investment in Alibaba Group, which we now record as a marketable
equity security. Commencing with the Alibaba Group IPO in September 2014, we no longer use the
equity method to account for our interest in Alibaba Group, and our earnings in equity interests and
net income have been and will continue to be materially lower. Earnings in equity interests increased
during the year ended December 31, 2014, compared to 2013, primarily due to continued improved
financial performance for Alibaba Group, which was offset in part by a significant decline in earnings
in equity interests during the fourth quarter of 2014, following Alibaba Group’s IPO.
See 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 $8 million in 2015, compared to $10 million in 2014 and $10 million in
2013. Noncontrolling interests recorded in 2015, 2014, and 2013 were related to the Yahoo!7 venture
in Australia and New Zealand.
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