INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2014

The income tax expense (benefit) for the year ended December 31, 2014 is as follows (in thousands):



	Current		Deferred			Total
International	$	496,719	$	(10,613	)	$	486,106
U.S. Federal	10,316		47,847			58,163
U.S. State	28,953		(5,527		)	23,426
Total	$	535,988	$	31,707		$	567,695

The income tax expense (benefit) for the year ended December 31, 2013 is as follows (in thousands):



	Current		Deferred			Total
International	$	396,162	$	(16,314	)	$	379,848
U.S. Federal	5,250		11,454			16,704
U.S. State	13,431		(6,244		)	7,187
Total	$	414,843	$	(11,104	)	$	403,739

The income tax expense (benefit) for the year ended December 31, 2012 is as follows (in thousands):



	Current		Deferred			Total
International	$	302,352	$	(13,792	)	$	288,560
U.S. Federal	3,681		37,956			41,637
U.S. State	12,203		(4,568		)	7,635
Total	$	318,236	$	19,596		$	337,832

Tax effects of temporary differences that give rise to significant portions of deterred tax assets and liabilities

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities at December 31, 2014 and 2013 are as follows (in thousands):



	2014			2013
Deferred tax assets/(liabilities):
Net operating loss carryforward — U.S.	$	176,786		$	263,994
Net operating loss carryforward — International	22,353			21,660
Fixed assets	—			818
Accrued expenses	41,117			22,708
Stock-based compensation and other stock based payments	54,935			40,346
Other	24,456			33,530
Subtotal	319,647			383,056

Discount on convertible notes	(141,193		)	(97,550		)
Intangible assets and other	(856,807		)	(356,669		)
Euro denominated debt	(35,441		)	—
Fixed assets	(3,409		)	—
Less valuation allowance on deferred tax assets	(161,997		)	(173,558		)
Net deferred tax assets (liabilities)⁽¹⁾	$	(879,200	)	$	(244,721	)

(1) Includes non-current deferred tax assets of $8.5 million and $7.1 million as of December 31, 2014 and 2013, respectively, reported in "Other assets" on the Consolidated Balance Sheets and current deferred tax liabilities of $1.2 million and $38 thousand as of December 31, 2014 and 2013, respectively, reported in "Accrued expenses and other current liabilities" on the Consolidated Balance Sheets.

Schedule of effective income tax rate reconciliation

The effective income tax rate of the Company is different from the amount computed using the expected U.S. statutory federal rate of 35% as a result of the following items (in thousands):



	2014			2013			2012
Income tax expense at federal statutory rate	$	1,046,307		$	803,788		$	616,654
Adjustment due to:
Foreign rate differential	(289,692		)	(226,894		)	(175,932		)
Innovation Box Tax benefit	(233,545		)	(177,195		)	(118,916		)
Other	44,625			4,040			16,026
Income tax expense	$	567,695		$	403,739		$	337,832

Reconciliation of unrecognized tax benefits

The following is a reconciliation of the total amount of unrecognized tax benefits (in thousands):



	2014			2013			2012
Unrecognized tax benefit — January 1	$	22,104		$	7,343		$	3,192
Gross increases — tax positions in current period	9,305			8,597			4,423
Gross increases — tax positions in prior periods	6,569			3,507			343
Increase acquired in business combination	17,767			7,089			—
Gross decreases — tax positions in prior periods	(2,164		)	(495		)	(615		)
Reduction due to lapse in statute of limitations	(346		)	(3,937		)	—
Reduction due to settlements during the current period	(879		)	—			—
Unrecognized tax benefit — December 31	$	52,356		$	22,104		$	7,343

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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