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TAXES ON INCOME | 12 Months Ended
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Dec. 31, 2015
Income Tax Disclosure [Abstract] |
TAXES ON INCOME | TAXES ON INCOME The Company's pre-tax income from continuing operations before equity in earnings of equity method investees consisted of $1.1 billion, $810 million and $1.3 billion from U.S. operations and $11 million, $13 million and $19 million from foreign operations for the years ended December 31, 2015, 2014 and 2013, respectively. For the year ended December 31, 2015, the Company recognized $145 million deferred tax expense associated with the financial reporting and tax basis difference resulting from the contribution of the Clinical Trials business to the Q 2 Solutions joint venture. This was partially offset by a $58 million deferred tax benefit resulting from the future tax effects of winding down a subsidiary. For the year ended December 31, 2013, pre-tax income from continuing operations in the U.S., income tax expense and the effective tax rate, including the state and local income tax rate, net of federal benefit, were impacted by the gain on sale of royalty rights. For further details regarding the sale of royalty rights, see Note 6. The components of income tax expense from continuing operations for 2015, 2014 and 2013 were as follows:
| 2015 |  | 2014 |  | 2013
Current: |  |  |  |  |
Federal | $ | 231 |  |  | $ | 204 |  |  | $ | 417 |
State and local | 27 |  |  | 34 |  |  | 59 |
Foreign | 3 |  |  | 3 |  |  | 4 |
Deferred: |  |  |  |  |
Federal | 104 |  |  | 28 |  |  | 27 |
State and local | 7 |  |  | (6 | ) |  | (6 | )
Foreign | 1 |  |  | (1 | ) |  | (1 | )
Total | $ | 373 |  |  | $ | 262 |  |  | $ | 500 |
A reconciliation of the federal statutory rate to the Company's effective tax rate for 2015, 2014 and 2013 was as follows:
| 2015 |  | 2014 |  | 2013
Tax provision at statutory rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State and local income taxes, net of federal benefit | 2.6 |  |  | 3.2 |  |  | 2.8 |
Impact of foreign operations | — |  |  | (0.2 | ) |  | (0.3 | )
Tax credits | (0.5 | ) |  | (0.8 | ) |  | (0.4 | )
Deferred taxes on gains and losses | (2.7 | ) |  | — |  |  | — |
Adjustments to unrecognized tax positions (the net benefit mainly results from favorable resolution of certain tax contingencies) | (0.4 | ) |  | (5.1 | ) |  | 1.5 |
Non-deductible expenses, primarily meals and entertainment expenses | 0.5 |  |  | 0.4 |  |  | 0.3 |
Impact of noncontrolling interests | (1.6 | ) |  | (1.7 | ) |  | (1.0 | )
Impact of equity earnings | 0.7 |  |  | 1.1 |  |  | 0.6 |
Other, net | 0.2 |  |  | (0.1 | ) |  | (0.7 | )
Effective tax rate | 33.8 | % |  | 31.8 | % |  | 37.8 | %
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets (liabilities) at December 31, 2015 and 2014 were as follows:
| 2015 |  | 2014
Current deferred tax assets: |  |  |
Accounts receivable reserves | $ | — |  |  | $ | 91 |
Liabilities not currently deductible | — |  |  | 78 |
Total current deferred tax assets | $ | — |  |  | $ | 169 |
Non-current deferred tax assets (liabilities): |  |  |
Accounts receivable reserves | $ | 95 |  |  | $ | — |
Liabilities not currently deductible | 202 |  |  | 138 |
Stock-based compensation | 49 |  |  | 42 |
Capitalized R&D expense | 1 |  |  | 3 |
Basis differences in investments, joint ventures and subsidiaries | (90 | ) |  | — |
Net operating loss carryforwards, net of valuation allowance | 140 |  |  | 165 |
Depreciation and amortization | (517 | ) |  | (519 | )
Total non-current deferred tax liabilities, net | $ | (120 | ) |  | $ | (171 | )
During the fourth quarter of 2015, the Company early adopted a new accounting standard which requires that all deferred income tax assets and liabilities be classified as non-current in the balance sheet (see Note 2). As the Company elected to apply the standard prospectively, prior periods were not retrospectively adjusted. Adoption of this standard resulted in $168 million of deferred taxes associated with current assets and liabilities being classified as non-current deferred tax assets of $26 million and as a reduction of non-current deferred tax liabilities of $142 million on the consolidated balance sheet as of December 31, 2015. At December 31, 2015 and 2014, non-current deferred tax assets of $37 million and $33 million, respectively, are recorded in other long-term assets in the consolidated balance sheets. At December 31, 2015 and 2014, non-current deferred tax liabilities of $157 million and $204 million, respectively, are included in other long-term liabilities in the consolidated balance sheets. As of December 31, 2015, the Company had estimated net operating loss carryforwards for federal and state income tax purposes of $268 million and $1.4 billion, respectively, which expire at various dates through 2035. Estimated net operating loss carryforwards for foreign income tax purposes are $48 million at December 31, 2015, some of which can be carried forward indefinitely while others expire at various dates through 2025. As of December 31, 2015, 2014 and 2013, deferred tax assets associated with net operating loss carryforwards of $222 million, $242 million and $140 million, respectively, have each been reduced by valuation allowances of $54 million, $60 million and $34 million, respectively. The increase in the valuation allowance as of December 31, 2014 was a result of a $14 million valuation allowance recorded on net operating loss carryforwards acquired in a business combination, with the remainder primarily associated with additional net operating losses generated during 2014. The Company has not provided U.S. federal income and foreign tax withholdings on undistributed earnings from certain non-U.S. subsidiaries for which the Company intends to reinvest such earnings indefinitely outside the U.S. Determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable. Income taxes payable, including those classified in other long-term liabilities in the consolidated balance sheets at December 31, 2015 and 2014, were $50 million and $110 million, respectively. Prepaid income taxes were $41 million and $44 million at December 31, 2015 and 2014, respectively, and were included in prepaid expenses and other current assets in the consolidated balance sheets. The total amount of unrecognized tax benefits as of and for the years ended December 31, 2015, 2014 and 2013 consisted of the following:
| 2015 |  | 2014 |  | 2013
Balance, beginning of year | $ | 122 |  |  | $ | 168 |  |  | $ | 199 |
Additions: |  |  |  |  |
For tax positions of current year | 5 |  |  | 17 |  |  | 11 |
For tax positions of prior years | 5 |  |  | 1 |  |  | 12 |
Reductions: |  |  |  |  |
Changes in judgment | (11 | ) |  | (56 | ) |  | (23 | )
Expirations of statutes of limitations | (3 | ) |  | (6 | ) |  | (2 | )
Settlements | (27 | ) |  | (2 | ) |  | (29 | )
Balance, end of year | $ | 91 |  |  | $ | 122 |  |  | $ | 168 |
The contingent liabilities for tax positions primarily relate to uncertainties associated with the realization of tax benefits derived from the allocation of income and expense among state jurisdictions, the characterization and timing of certain tax deductions associated with business combinations, income and expenses associated with certain intercompany licensing arrangements, certain tax credits and the deductibility of certain settlement payments. The total amount of unrecognized tax benefits as of December 31, 2015, that, if recognized, would affect the effective income tax rate from continuing operations is $38 million. Based upon the expiration of statutes of limitations, settlements and/or the conclusion of tax examinations, the Company believes it is reasonably possible that the total amount of unrecognized tax benefits may decrease by up to $4 million within the next twelve months. Accruals for interest expense on contingent tax liabilities are classified in income tax expense in the consolidated statements of operations. Accruals for penalties have historically been immaterial. Interest expense (income) included in income tax expense in each of the years ended December 31, 2015, 2014 and 2013 was approximately $0 million, $(1) million and $3 million respectively. As of December 31, 2015 and 2014, the Company has approximately $9 million and $12 million, respectively, accrued, net of the benefit of a federal and state deduction, for the payment of interest on uncertain tax positions. The recognition and measurement of certain tax benefits includes estimates and judgment by management and inherently involves subjectivity. Changes in estimates may create volatility in the Company's effective tax rate in future periods and may be due to settlements with various tax authorities (either favorable or unfavorable), the expiration of the statute of limitations on some tax positions and obtaining new information about particular tax positions that may cause management to change its estimates. In the regular course of business, various federal, state, local and foreign tax authorities conduct examinations of the Company's income tax filings and the Company generally remains subject to examination until the statute of limitations expires for the respective jurisdiction. The Internal Revenue Service (“IRS”) has completed its examinations of the Company's consolidated federal income tax returns up through and including the 2011 tax year; however, the Company plans to pursue all alternatives for settlement, including litigation, for certain tax adjustments related to its 2009 tax year. At this time, the Company does not believe that there will be any material additional payments beyond its recorded contingent liability reserves that may be required as a result of these tax audits. As of December 31, 2015, a summary of the tax years that remain subject to examination, or that are under appeal, for the Company's major jurisdictions are: United States - federal 2012 - 2015 United States - various states 2006 - 2015

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 + Details
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