Income Taxes

6 Months Ended

Jun. 30, 2011

Income Taxes [Abstract]

Income Taxes

8. Income Taxes

Interim income tax expense or benefit is recorded by applying a projected full-year effective income tax rate to the quarterly Income before income taxes for results that are deemed to be reliably estimable. Certain results dependent on fair value adjustments of the Mortgage Production and Mortgage Servicing segments are considered not to be reliably estimable and therefore discrete year-to-date income tax provisions are recorded on those results.

Income tax (benefit) expense was significantly impacted by the following items that increased (decreased) the effective tax rate:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
	(In millions)
State and local income taxes, net of federal tax benefits	$	(4	)	$	(13	)	$	1		$	(12	)
Liabilities for income tax contingencies		—			—			(8	)		1
Changes in valuation allowance		2			3			6			5
Noncontrolling interest (1)		(2	)		(3	)		(3	)		(3	)

⁽¹⁾   Represents Realogy Corporation’s portion of income taxes related to the income or loss attributable to PHH Home Loans.

State and local income taxes, net of federal tax benefits. The impact to the effective tax rate from state and local income taxes primarily represents the volatility in the pre-tax income or loss, as well as the mix of income and loss from the operations by entity and state income tax jurisdiction. As a result of this mix, during the six months ended June 30, 2011 as compared to 2010, the effective state tax rate has decreased.

Liabilities for income tax contingencies. The impact to the effective tax rate from changes in the liabilities for income tax contingencies primarily represents decreases in liabilities associated with the resolution and settlement with various taxing authorities, partially offset by increases in liabilities associated with new uncertain tax positions taken during the period. During the six months ended June 30, 2011, the IRS concluded its examination and review of the Company’s taxable years 2006 through 2009.

Changes in valuation allowance. The impact to the effective tax rate from changes in valuation allowance primarily represents loss carryforwards generated during the period for which the Company believes it is more likely than not that the amounts will not be realized. For the six months ended June 30, 2011 and 2010, the increases were primarily driven by tax losses generated by our mortgage business in each period.

Noncontrolling interest. The impact to the effective tax rate from noncontrolling interest primarily represents the impact of PHH Home Loans’ election to report as a partnership for federal and state income tax purposes, whereby, the tax expense is reported by the individual LLC members. Accordingly, the Company’s Income tax (benefit) expense includes only its proportionate share of the income tax related to the income or loss generated by PHH Home Loans.