v2.4.0.6
Income Taxes
 12 Months Ended
Dec. 31, 2012
Income Taxes [Abstract]  
Income Taxes

14. Income Taxes

The provision (benefit) for income taxes on income (loss) from continuing operations consisted of the following:

 

                                             
    TransUnion
Holding		     TransUnion Corp.  

(in millions)

   Inception
Through
December 31,
2012		     Successor
Eight  Months
Ended
December 31,
2012		          Predecessor
Four  Months
Ended
April 30,
2012		     Predecessor
Twelve Months
Ended
December 31,
2011		     Predecessor
Twelve Months
Ended
December 31,
2010		  

Federal

                                            

Current

   $ 0.1     $ —           $ 1.0     $ (3.0 )    $ 9.7  

Deferred

     (3.0 )      13.2           (16.1 )      (1.3 )      10.4  

State

                                            

Current

     (0.5 )      0.4           0.1       1.6       (2.2 ) 

Deferred

     (0.3 )      0.4           (1.5 )      (1.4 )      0.1  

Foreign

                                            

Current

     12.1       12.1           5.7       22.7       26.1  

Deferred

     (1.8 )      (1.8 )          (0.7 )      (0.8 )      2.2  
   

 

 

    

 

 

        

 

 

    

 

 

    

 

 

  

Total provision (benefit) for income taxes

   $ 6.6     $ 24.3         $ (11.5 )    $ 17.8     $ 46.3  
   

 

 

    

 

 

        

 

 

    

 

 

    

 

 

  

The components of income (loss) from continuing operations before income taxes consisted of the following:

 

                                             
    TransUnion
Holding		     TransUnion Corp.  

(in millions)

   Inception
Through
December 31,
2012		     Successor
Eight  Months
Ended
December 31,
2012		          Predecessor
Four Months
Ended
April 30,
2012		     Predecessor
Twelve Months
Ended
December 31,
2011		     Predecessor
Twelve Months
Ended
December 31,
2010		  

Domestic

   $ (33.3 )    $ 36.2         $ (79.5 )    $ 0.2     $ 12.4  

Foreign

     36.0       36.0           15.6       66.9       70.6  
   

 

 

    

 

 

        

 

 

    

 

 

    

 

 

  

Total income (loss) from continuing operations before income taxes

   $ 2.7     $ 72.2         $ (63.9 )    $ 67.1     $ 83.0  
   

 

 

    

 

 

        

 

 

    

 

 

    

 

 

  

The provision for income taxes on the loss of discontinued operations for the year ended December 31, 2011, was $0.1 million. The benefit for income taxes on the loss of discontinued operations for the year ended December 31, 2010, was $2.9 million.

 

The effective income tax rate reconciliation consisted of the following:

 

                                                         
    TransUnion Holding     TransUnion Corp.  

(in millions)

   Inception Through
December 31, 2012		     Successor Eight
Months  Ended
December 31, 2012		              Predecessor Four
Months Ended
April 30, 2012		  

Income taxes at 35% statutory rate

   $ 0.9       35.0 %    $ 25.3       35.0 %            $ (22.4 )      35.0 % 

Increase (decrease) resulting from:

                                                        

State taxes net of federal income tax benefit

     (0.9 )      (35.0 )%     0.7       1.0 %             (1.4 )      2.2 %

Foreign rate differential

     (4.0 )      (148.1 )%     (4.0 )      (5.5 )%             (1.2 )      1.9 %

Nondeductible change in control transaction expenses

     1.8       66.7 %      0.2       0.3 %              2.7       (4.2 )% 

Application of ASC 740-30 to foreign earnings

     4.3       159.2 %      (1.9 )      (2.7 )%              8.1       (12.7 )% 

Impact of foreign dividends, including Subpart F, and foreign tax credits

     5.0       185.2 %      4.9       6.8 %              2.0       (3.1 )% 

Other

     (0.5 )      (18.6 )%      (0.9 )      (1.2 )%              0.7       (1.1 )% 
   

 

 

            

 

 

                    

 

 

          

Total

   $ 6.6       244.4 %    $ 24.3       33.7 %            $ (11.5 )      18.0 % 
   

 

 

            

 

 

                    

 

 

          

 

                                 
    TransUnion Corp.  

(in millions)

   Predecessor Twelve Months
Ended December 31, 2011		     Predecessor Twelve Months
Ended December 31, 2010		  

Income taxes at 35% statutory rate

   $ 23.5       35.0 %    $ 29.0       35.0 % 

Increase (decrease) resulting from:

                                

State taxes net of federal income tax benefit

     (0.4 )      (0.6 )%      (1.6 )     (2.0 )%

Foreign rate differential

     (3.9 )      (5.8 )%      (0.2 )     (0.2 )%

Nondeductible change in control transaction expenses

     (4.5 )      (6.7 )%      9.5       11.4 % 

Application of ASC 740-30 to foreign earnings

     2.5       3.7 %      1.6       1.9 % 

Impact of foreign dividends and foreign tax credits

     2.0       3.0 %      7.8       9.4 % 

Other

     (1.4 )      (2.1 )%      0.2       0.3 % 
   

 

 

            

 

 

          

Total

   $ 17.8       26.5 %   $ 46.3       55.8 % 
   

 

 

            

 

 

          

Effective January 1, 2012, the look-through rule under subpart F of the U.S. Internal Revenue Code expired. The subpart F provisions require U.S. corporate shareholders to recognize current U.S. taxable income from passive income, such as dividends earned, at certain foreign subsidiaries regardless of whether that income is remitted to the U.S. The look-through rule had provided an exception to this recognition for subsidiary passive income attributable to an active business. Beginning in 2012, under ASC 740-30, we recorded tax expense for the income tax we would incur if our foreign earnings were distributed up our foreign chain of ownership, but not remitted to the U.S. In calculating the U.S. tax expense on unremitted foreign earnings, we offset the increase in tax with the benefit of related foreign tax credits. As part of the American Taxpayer Relief Act of 2012 enacted into law on January 2, 2013, the look-through rule was retroactively reinstated to January 1, 2012, and we expect to reverse the tax expense we recorded for Subpart F in 2012 during the first quarter of 2013.

The increase in tax deductible transaction costs and interest expense resulting from the 2012 Change in Control Transaction and the related increase in debt significantly reduced the amount of foreign tax credits available to offset our tax expense on both foreign dividends received and unremitted foreign earnings.

 

TransUnion Holding

The effective tax rate was 244.4% for the period of inception through December 31, 2012. This rate was higher than the 35% U.S. federal statutory rate primarily due to the lapse of the look-through rule and the reduction in available foreign tax credits, the unfavorable impact of ASC 740-30 and the tax non-deductibility of certain costs incurred in connection with the 2012 Change in Control Transaction, partially offset by a favorable tax rate differential on the Company’s foreign earnings.

As a result of the 2012 Change in Control Transaction and increased debt service requirements resulting from the additional debt incurred by TransUnion Holding, we asserted under ASC 740-30 that all unremitted foreign earnings of TransUnion Corp. accumulated as of April 30, 2012, were not indefinitely reinvested outside the U.S. Accordingly, we recorded a deferred tax liability for the full estimated U.S. tax cost, net of related foreign tax credits, associated with remitting these earnings back to the U.S.

TransUnion Corp.

As a result of the 2012 Change in Control Transaction, TransUnion Corp. has two taxable years in 2012, one for the Predecessor and one for the Successor. Effective April 30, 2012, TransUnion Corp. and its U.S. subsidiaries will join in the filing of a consolidated U.S. federal tax return with TransUnion Holding. The tax expense and deferred tax accounts of TransUnion Corp. Successor are calculated as if TransUnion Corp. files a separate U.S. tax return, which excludes the operations of TransUnion Holding.

The effective tax rate was 33.7% for the eight months ended December 31, 2012. This rate was lower than the U.S. federal statutory rate of 35% primarily due to the favorable tax rate differential on foreign earnings and the favorable impact on the ASC 740-30 deferred tax liability due to a reduction in the Dominican Republic withholding tax, partially offset by the lapse of the look-through rule and the reduction in available foreign tax credits.

For the four months ended April 30, 2012, we reported a loss from continuing operations before income taxes. The effective tax benefit rate for this period of 18.0% was lower than the U.S. federal statutory rate of 35% primarily due to the application of ASC 740-30 to our unremitted foreign earnings, the non-deductibility of certain costs incurred in connection with the 2012 Change in Control Transaction and limitations on our foreign tax credits.

For 2011, the effective tax rate of 26.5% was lower than the U.S. federal statutory rate of 35% primarily due to the additional tax-deductible transaction costs resulting from our analysis of the fees incurred in the 2010 Change in Control Transaction and lower tax rates in foreign countries, primarily Canada and Puerto Rico, partially offset by the impact of foreign dividends and foreign tax credits.

For 2010, the effective tax rate of 55.8% was higher than the U.S. federal statutory rate of 35% primarily due to the nondeductible expenses related to the 2010 Change in Control Transaction and the limitation on our foreign tax credit.

 

Components of net deferred income tax consisted of the following:

 

                             

(in millions)

   TransUnion
Holding
December 31,
2012		     TransUnion Corp.
Successor
December 31,
2012		          TransUnion Corp.
Predecessor
December 31,
2011		  

Deferred income tax assets:

                            

Deferred compensation

   $ 4.4     $ 4.4         $ 3.9  

Stock-based compensation

     0.3       0.3           2.4  

Employee benefits

     6.3       6.3           5.7  

Legal reserves and settlements

     1.9       1.9           1.7  

Hedge investments

     2.2       2.2           —    

Financing related costs

     46.4       46.4           —    

Loss and credit carryforwards

     71.0       51.3           30.5  

Other

     6.3       2.8           2.8  
   

 

 

    

 

 

        

 

 

  

Gross deferred income tax assets

   $ 138.8     $ 115.6         $ 47.0  

Valuation allowance

     (27.2 )      (27.2 )          (16.9 )
   

 

 

    

 

 

        

 

 

  

Total deferred income tax assets, net

   $ 111.6     $ 88.4         $ 30.1  
   

 

 

    

 

 

        

 

 

  

Deferred income tax liabilities:

                            

Depreciation and amortization

   $ (662.1 )    $ (662.1 )        $ (52.4 )

Investments in affiliated companies

     (17.1 )      (17.1 )          —    

Taxes on undistributed foreign earnings

     (49.7 )      (32.2 )          (4.8 )

Other

     (3.9 )      (3.9 )          (4.1 )
   

 

 

    

 

 

        

 

 

  

Total deferred income tax liability

   $ (732.8 )    $ (715.3 )        $ (61.3 ) 
   

 

 

    

 

 

        

 

 

  

Net deferred income tax liability

   $ (621.2 )    $ (626.9 )        $ (31.2 )
   

 

 

    

 

 

        

 

 

  

The temporary differences resulting from differing treatment of items for tax and accounting purposes result in deferred tax assets and liabilities. If deferred tax assets are not likely to be recovered in future years, a valuation allowance is recorded. During 2012, our valuation allowance increased $10.3 million. As of December 31, 2012 and 2011, a valuation allowance of $27.2 million and $16.9 million, respectively, was recorded against the deferred tax assets generated by capital loss, foreign loss and foreign tax credit carryforwards. Our capital loss carryforwards will expire over the next three years and our foreign loss and credit carryforwards will expire over the next ten years.

We have not provided for U.S. deferred income tax on $16.4 million of unremitted earnings from certain non-U.S. subsidiaries accumulated after April 30, 2012, since these earnings are intended to be permanently reinvested in operations outside of the United States. It is impractical at this time to determine the tax impact if these earnings were distributed.

The total amount of unrecognized tax benefits of TransUnion Holding as of December 31, 2012, was $4.9 million. The amount of unrecognized tax benefits of TransUnion Holding that would affect the effective tax rate, if recognized, was $4.9 million. The total amount of unrecognized tax benefits of TransUnion Corp. as of December 31, 2012 and 2011, was $4.8 million and $3.2 million, respectively. The amount of unrecognized tax benefits of TransUnion Corp. that would affect the effective tax rate, if recognized, was $4.8 million and $3.2 million as of December 31, 2012 and 2011, respectively.

 

Total amount of unrecognized tax benefits consisted of the following:

 

                             

(in millions)

   TransUnion
Holding
December 31,
2012		     TransUnion Corp.
Successor
December 31,
2012		          TransUnion Corp.
Predecessor
December 31,
2011		  

Balance as of beginning of period

   $ 3.2     $ 3.2         $ 2.1  

Additions for tax positions of prior years

     0.2       0.2           0.4  

Reductions for tax positions of prior years

     —         —             —    

Additions for tax positions of current year

     1.7       1.6           2.2  

Reductions relating to settlement and lapse of statute

     (0.2 )      (0.2 )          (1.5 )
   

 

 

    

 

 

        

 

 

  

Balance as of December 31

   $ 4.9     $ 4.8         $ 3.2  
   

 

 

    

 

 

        

 

 

  

Consistent with prior periods, we classify interest on unrecognized tax benefits as interest expense and tax penalties as other income or expense on the statement of income. We classify any interest or penalties related to unrecognized tax benefits as other liabilities on the balance sheet. Interest expense related to taxes was insignificant for the years ended December 31, 2012, and December 31, 2011. The accrued interest payable for taxes as of December 31, 2012 and 2011 was $0.5 million and $0.5 million, respectively. There was no significant expense recognized, or significant liability recorded, for tax penalties as of December 31, 2012 or 2011.

We are regularly audited by federal, state, local and foreign taxing authorities. Given the uncertainties inherent in the audit process, it is reasonably possible that certain audits could result in a significant increase or decrease in the total amount of unrecognized tax benefits. An estimate of the range of the increase or decrease in unrecognized tax benefits due to audit results cannot be made at this time. As of December 31, 2012, tax years 2008 and forward remained open for examination in some state and foreign jurisdictions, and tax years 2009 and forward remained open for the U.S. federal audit.