Income Taxes (Tables)

12 Months Ended

Nov. 30, 2015

The benefit (provision) for income taxes consisted of the following:

A reconciliation of the statutory rate and the effective tax rate was as follows:



	Percentage of Pretax Income
	2015		2014		2013
Statutory rate	35.00	%	35.00	%	35.00	%
State income taxes, net of federal income tax benefit	3.22		3.17		3.16
Domestic production activities deduction	(3.01	)	(2.81	)	—
Tax reserves and interest expense	2.64		0.59		0.56
Deferred tax asset valuation reversal	(0.09	)	(0.28	)	(10.22	)
State net operating loss adjustment (1)	(3.00	)	—		—
Tax credits	(1.92	)	(0.41	)	(0.45	)
Other	(0.12	)	(0.46	)	(1.09	)
Effective rate	32.72	%	34.80	%	26.96	%

The tax effects of significant temporary differences that give rise to the net deferred tax assets were as follows:



	November 30,
(In thousands)	2015			2014
Deferred tax assets:
Inventory valuation adjustments	$	58,902		59,208
Reserves and accruals	197,980			158,858
Net operating loss carryforwards	122,573			115,850
Capitalized expenses	91,873			66,768
Investments in unconsolidated entities	10,407			24,843
Other assets	45,725			32,904
Total deferred tax assets	527,460			458,431
Valuation allowance	(5,945		)	(8,029	)
Total deferred tax assets after valuation allowance	521,515			450,402
Deferred tax liabilities:
Capitalized expenses	32,954			64,448
Convertible debt basis difference	229			5,833
Rialto investments in partnerships	11,055			22,262
Deferred income	104,270			7,707
Other	32,282			36,323
Total deferred tax liabilities	180,790			136,573
Net deferred tax assets	$	340,725		313,829

The detail of the Company's net deferred tax assets were as follows:



	November 30,
(In thousands)	2015		2014
Deferred tax assets (liabilities): (1)
Lennar Homebuilding	$	327,645	325,779
Rialto	10,518		(3,335	)
Lennar Financial Services	2,562		(8,615	)
Net deferred tax assets	$	340,725	313,829


(1)	Deferred tax assets are included in other assets and deferred tax liabilities are included in other liabilities in the respective assets and liabilities for each segment detailed above.

The following table summarizes the changes in gross unrecognized tax benefits:



	Years Ended November 30,
(In thousands)	2015		2014		2013
Gross unrecognized tax benefits, beginning of year	$	7,257	10,459		12,297
Increase due to tax positions taken during prior period (1)	5,028		—		—
Increases due to tax positions taken during the current period (2)	—		—		1,982
Decreases due to settlements with taxing authorities (3)	—		(3,202	)	(3,820	)
Gross unrecognized tax benefits, end of year	$	12,285	7,257		10,459


(1)	Increased the Company's effective tax rate for the year ended November 30, 2015 from 32.30% to 32.72% due to state audits.


(2)	Increased the Company's effective tax rate for the year November 30, 2013 from 26.71% to 26.96%.


(3)	Decreased the Company's effective tax rate for the year ended November 30, 2014 from 35.13% to 34.80%. The decrease for the year ended November 30, 2013 had no effect on the Company's effective tax rate.

The following summarizes the changes in interest and penalties accrued with respect to gross unrecognized tax benefits:



	November 30,
(In thousands)	2015			2014
Accrued interest and penalties, beginning of the year	$	31,469		19,124
Accrual of interest and penalties (primarily related to federal and state audits)	33,841			13,956
Reduction of interest and penalties	(165		)	(1,611	)
Accrued interest and penalties, end of the year	$	65,145		31,469