Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Components of (Provision) Benefit for Income Taxes

The components of the Company’s provision (benefit) for income taxes for the years ended December 31, 2014, 2013 and 2012 are shown in the table below.



	Years Ended December 31,
	2014			2013			2012
Current	(in millions)
Federal	$	3		$	(22	)	$	(5	)
State and local	(1		)	(3		)	5
	2			(25		)	—
Deferred
Federal	14			(319		)	4
State and local	(3		)	(32		)	2
	11			(351		)	6
Total provision (benefit) for income taxes	$	13		$	(376	)	$	6

Reconciliation of Statutory Federal Tax Rate to Effective Tax Rate

The following table shows the principal reasons for the differences between the effective income tax rate and the statutory federal income tax rate for the years ended December 31, 2014, 2013 and 2012.



	Years Ended December 31,
	2014		2013		2012
Statutory federal tax rate	35.0	%	35.0	%	35.0	%
State and local taxes, net of federal tax benefit	2.8		2.2		4.3
Non-deductible interest expenses	(1.4	)	(0.4	)	11.8
Non-deductible goodwill impairment charge	—		(2.2	)	—
Tax attribution reduction	—		(0.1	)	(4.3	)
Subsidiary basis adjustment	0.8		1.3		19.1
Change in valuation allowance	(34.9	)	(5.9	)	(63.8	)
Change in unrecognized tax benefits	2.2		2.4		—
Change in state tax laws and deferred items	(7.3	)	(0.2	)	4.3
Other, net	(0.8	)	(0.6	)	6.4
Effective tax rate	(3.6	)%	31.5	%	12.8	%

Components of Deferred Tax Assets and Liabilities

Significant components of deferred income tax assets and liabilities as of December 31, 2014 and 2013 are shown in the following table.



	At December 31,
	2014			2013
	(in millions)
Deferred tax assets
Deferred revenue	$	—		$	4
Allowance for doubtful accounts	6			7
Deferred and other compensation	17			13
Capital investments	6			6
Debt, capitalized fees, and other interest	104			148
Pension and other post-employment benefits	31			34
Restructuring reserve	15			—
Net operating loss and credit carryforwards	332			341
Other, net	16			21
Total deferred tax assets	527			574
Valuation allowance	(353		)	(208		)
Net deferred tax assets	$	174		$	366
Deferred tax liabilities
Fixed assets and capitalized software	$	(13	)	$	(33	)
Goodwill and intangible assets	(137		)	(285		)
Deferred directory costs	(30		)	(35		)
Investment in subsidiaries	(8		)	(10		)
Gain on debt retirement	(16		)	(22		)
Total deferred tax liabilities	$	(204	)	$	(385	)
Net deferred tax liability	$	(30	)	$	(19	)

Reconciliation of Gross Unrecognized Tax Benefits

The following table shows changes to and balances of unrecognized tax benefits for the years ended December 31, 2014 and 2013.



	Years Ended December 31,
	2014			2013
	(in millions)
Balance at beginning of period	$	19		$	6
Gross additions for tax positions related to SuperMedia acquisition	—			45
Gross additions for tax positions related to the current year	—			1
Gross additions for tax positions related to prior years	3			—
Gross reductions for tax positions related to the lapse of applicable statute of limitations	(11		)	(33		)
Settlements	—			—
Balance at end of period	$	11		$	19

Schedule of Valuation and Qualifying Accounts

Deferred Income Tax Asset Valuation Allowance



	Years Ended December 31,
	2014		2013		2012
	(in millions)
Balance at beginning of period	$	208	133		$	157
Net additions charged to revenue and expense	125		75		(24		)
Net charges to other balance sheet accounts	20		—		—
Balance at end of period	$	353	$	208	$	133