XML 26 R15.htm IDEA: XBRL DOCUMENT v3.5.0.2
Income Taxes
6 Months Ended
Jun. 30, 2016
Income Tax Disclosure [Abstract]  
Income Taxes
INCOME TAXES
Our effective tax rate, exclusive of noncontrolling interests, for each of the three and six months ended June 30, 2016 was 38.0%. Our effective tax rate, exclusive of noncontrolling interests, for the three and six months ended June 30, 2015 was 36.3% and 37.8%, respectively. The effective tax rate for the three and six months ended June 30, 2016 was favorably affected by the resolution of state and federal tax matters. The effective tax rate for the three and six months ended June 30, 2015 was favorably affected by the resolution of a Puerto Rican tax matter.
Cash paid for income taxes was of $99.4 million and $142.5 million for the six months ended June 30, 2016 and 2015, respectively.
We are subject to income tax in the United States and Puerto Rico, as well as in multiple state jurisdictions. Our compliance with income tax rules and regulations is periodically audited by tax authorities. These authorities may challenge the positions taken in our tax filings. We are currently under examination or administrative review by state and local taxing authorities for various tax years. We recognize interest and penalties as incurred within the provision for income taxes in the consolidated statements of income. As of June 30, 2016, we accrued a liability for penalties of $0.5 million and a liability for interest (including interest on penalties) of $10.9 million related to our uncertain tax positions.
We believe that our recorded liabilities for uncertain tax positions are adequate. However, a significant assessment against us in excess of the liabilities recorded could have a material adverse effect on our consolidated financial position, results of operations or cash flows. During the next twelve months, it is reasonably possible that the amount of unrecognized tax benefits will increase or decrease. Gross unrecognized benefits we expect to settle in the next twelve months are in the range of zero to $10 million.
We have deferred tax assets related to state net operating loss carryforwards. We provide a partial valuation allowance due to uncertainty surrounding the future utilization of these carryforwards in the taxing jurisdictions where the loss carryforwards exist. When determining the need for a valuation allowance, we consider all positive and negative evidence, including recent financial results, scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategies. The weight given to the positive and negative evidence is commensurate with the extent such evidence can be objectively verified. We adjust the valuation allowance in the period management determines it is more likely than not that deferred tax assets will or will not be realized.
Substantially all of our valuation allowance is associated with state loss carryforwards. The realization of our deferred tax asset for state loss carryforwards ultimately depends upon the existence of sufficient taxable income in the appropriate state taxing jurisdictions in future periods. We continue to regularly monitor both positive and negative evidence in determining the ongoing need for a valuation allowance. As of June 30, 2016, the valuation allowance associated with our state loss carryforwards was approximately $61 million.