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Income Taxes | 12 Months Ended
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Apr. 30, 2011
Income Taxes |
Income Taxes | NOTE 15: INCOME TAXES The components of income from continuing operations upon which domestic and foreign income taxes have been provided are as follows:
(in 000s) |  |  |  |
Year Ended April 30, |  | 2011 |  |  | 2010 |  |  | 2009 |  |  |  |
Domestic |  | $ | 639,914 |  |  | $ | 745,912 |  |  | $ | 815,614 |  |  |  |  |
Foreign |  |  | 37,111 |  |  |  | 38,223 |  |  |  | 23,756 |  |  |  |  |
|  | $ | 677,025 |  |  | $ | 784,135 |  |  | $ | 839,370 |  |  |  |  |
The components of income tax expense (benefit) for continuing operations are as follows:
|  |  |  |  |  |  |  | (in 000s) |
Year Ended April 30, |  | 2011 |  |  | 2010 |  |  | 2009 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 188,086 |  |  | $ | 92,992 |  |  | $ | 243,085 |
State |  |  | 45,068 |  |  |  | 23,625 |  |  |  | 38,418 |
Foreign |  |  | 21,456 |  |  |  | 16,052 |  |  |  | 1,393 |
|  |  | 254,610 |  |  |  | 132,669 |  |  |  | 282,896 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (799 | ) |  |  | 128,900 |  |  |  | 36,739 |
State |  |  | 3,521 |  |  |  | 33,448 |  |  |  | 6,582 |
Foreign |  |  | 288 |  |  |  | 172 |  |  |  | 98 |
|  |  | 3,010 |  |  |  | 162,520 |  |  |  | 43,419 |
Total income taxes for continuing operations |  | $ | 257,620 |  |  | $ | 295,189 |  |  | $ | 326,315 |
The reconciliation between the income tax provision and the amount computed by applying the statutory federal tax rate of 35% to income taxes of continuing operations is as follows:
Year Ended April 30, |  | 2011 |  |  | 2010 |  |  | 2009 |  |  |  |
U.S. statutory tax rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | % |  |  |  |
Change in tax rate resulting from: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
State income taxes, net of federal income tax benefit |  |  | 4.5 | % |  |  | 3.8 | % |  |  | 4.2 | % |  |  |  |
Permanent differences |  |  | (0.3 | )% |  |  | (0.5 | )% |  |  | 1.6 | % |  |  |  |
Uncertain tax positions |  |  | 1.1 | % |  |  | 0.9 | % |  |  | 0.5 | % |  |  |  |
Net decrease in valuation allowance |  |  | (1.3 | )% |  |  | (1.0 | )% |  |  | (1.2 | )% |  |  |  |
Other |  |  | (0.9 | )% |  |  | (0.6 | )% |  |  | (1.2 | )% |  |  |  |
Effective tax rate |  |  | 38.1 | % |  |  | 37.6 | % |  |  | 38.9 | % |  |  |  |
The significant components of deferred tax assets and liabilities of continuing operations are reflected in the following table:
(in 000s) |  |  |  |
As of April 30, |  | 2011 |  |  | 2010 |  |  |  |
Gross deferred tax assets: |  |  |  |  |  |  |  |  |  |  |  |
Accrued expenses |  | $ | 61,891 |  |  | $ | 17,554 |  |  |  |  |
Allowance for credit losses and related reserves |  |  | 102,587 |  |  |  | 164,783 |  |  |  |  |
Net operating loss carryovers |  |  | – |  |  |  | 200 |  |  |  |  |
Other |  |  | – |  |  |  | 237 |  |  |  |  |
Valuation allowance |  |  | (47,300 | ) |  |  | (1,745 | ) |  |  |  |
Current |  |  | 117,178 |  |  |  | 181,029 |  |  |  |  |
Deferred and stock-based compensation |  |  | 73,398 |  |  |  | 71,970 |  |  |  |  |
Property and equipment |  |  | – |  |  |  | 9,071 |  |  |  |  |
Deferred revenue |  |  | 23,166 |  |  |  | 25,595 |  |  |  |  |
Net operating loss carryovers |  |  | 21,057 |  |  |  | 26,292 |  |  |  |  |
Accrued expenses |  |  | 32,481 |  |  |  | 31,892 |  |  |  |  |
Capital loss carryover |  |  | 150,876 |  |  |  | 144,507 |  |  |  |  |
Other |  |  | 15,953 |  |  |  | 15,991 |  |  |  |  |
Valuation allowance |  |  | (94,261 | ) |  |  | (151,838 | ) |  |  |  |
Noncurrent |  |  | 222,670 |  |  |  | 173,480 |  |  |  |  |
|  |  | 339,848 |  |  |  | 354,509 |  |  |  |  |
Gross deferred tax liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Prepaid expenses |  |  | (4,734 | ) |  |  | (6,337 | ) |  |  |  |
Current |  |  | (4,734 | ) |  |  | (6,337 | ) |  |  |  |
Property and equipment |  |  | (10,731 | ) |  |  | – |  |  |  |  |
Basis difference in mortgage-related investment |  |  | (49,751 | ) |  |  | (81,118 | ) |  |  |  |
Intangibles |  |  | (139,963 | ) |  |  | (124,918 | ) |  |  |  |
Noncurrent |  |  | (200,445 | ) |  |  | (206,036 | ) |  |  |  |
Net deferred tax assets |  | $ | 134,669 |  |  | $ | 142,136 |  |  |  |  |
The loss from discontinued operations for fiscal years 2011, 2010 and 2009 of $13.3 million, $9.7 million and $27.4 million, respectively are net of tax benefits of $8.7 million, $8.0 million and $20.3 million, respectively. Our effective tax rate for discontinued operations was 39.4%, 45.1% and 42.5% for fiscal years 2011, 2010 and 2009, respectively. As of April 30, 2011, we have a capital loss deferred tax asset (DTA) of $147 million. The majority of this capital loss DTA resulted from the sale of our brokerage business in November 2008. Generally, for tax purposes, a capital loss can only be utilized to the extent we realize capital gains within five years of the end of the taxable year the capital loss was incurred. We do not currently expect to be able to realize a tax benefit for substantially all of this loss and, therefore, recorded a valuation allowance of $126.3 million. We have capital loss carryover of approximately $375 million which will expire if not used to offset future capital gains before December 31, 2013. During fiscal year 2010, our current tax expense was reduced and our deferred tax expense increased by offsetting amounts due to the tax effects of a tax accounting change impacting the timing of taxable income from certain mortgage related assets. Because of this treatment we recorded a noncurrent deferred tax liability of $81.1 million and a long-term receivable of the same amount as a result of this change. During fiscal year 2011, we changed our measurement of the more-likely-than-not tax basis of certain assets of a subsidiary as a result of new information obtained from ongoing interactions with the IRS. The result of this new information was to increase our noncurrent deferred tax liability in the amount of $66.3 million and to establish a long-term receivable for the same amount as it is not expected that these matters will be settled within twelve months. Certain of our subsidiaries file stand-alone returns in various states and foreign jurisdictions, and others join in filing consolidated or combined returns in such jurisdictions. At April 30, 2011, we had net operating losses (NOLs) in various states and foreign jurisdictions. The amount of state NOLs vary by taxing jurisdiction. We recorded deferred tax assets of $21.1 million for the tax effects of such losses and a valuation allowance of $10.3 million for the portion of such losses that, more likely than not, will not be realized. If not used, the NOLs will expire in varying amounts during fiscal years 2012 through 2031. We intend to indefinitely reinvest foreign earnings, therefore, a provision has not been made for income taxes that might be payable upon remittance of such earnings. Determination of the amount of unrecognized deferred tax liability on unremitted foreign earnings is not practicable. A reconciliation of the beginning and ending amount of unrecognized tax benefits for fiscal years 2011, 2010 and 2009 is as follows:
(in 000s) |  |  |  |  |  |  |
Year Ended April 30, |  | 2011 |  |  | 2010 |  |  | 2009 |  |  |  |
Balance, beginning of the year |  | $ | 129,767 |  |  | $ | 124,605 |  |  | $ | 137,608 |  |  |  |  |
Additions based on tax positions related to prior years |  |  | 28,262 |  |  |  | 12,957 |  |  |  | 14,541 |  |  |  |  |
Reductions based on tax positions related to prior years |  |  | (1,473 | ) |  |  | (2,427 | ) |  |  | (6,096 | ) |  |  |  |
Additions based on tax positions related to the current year |  |  | 3,417 |  |  |  | 3,314 |  |  |  | 4,110 |  |  |  |  |
Reductions related to settlements with tax authorities |  |  | (7,639 | ) |  |  | (8,545 | ) |  |  | (18,189 | ) |  |  |  |
Expiration of statute of limitations |  |  | (315 | ) |  |  | (1,061 | ) |  |  | (5,007 | ) |  |  |  |
Foreign currency translation |  |  | 1,057 |  |  |  | 924 |  |  |  | (2,362 | ) |  |  |  |
Other |  |  | 1,772 |  |  |  | – |  |  |  | – |  |  |  |  |
Balance, end of the year |  | $ | 154,848 |  |  | $ | 129,767 |  |  | $ | 124,605 |  |  |  |  |
Of the $154.8 million, $129.8 million and $124.6 million ending gross unrecognized tax benefit balance as of April 30, 2011, 2010 and 2009, respectively, $117.6 million, $106.8 million and $107.0 million, respectively, if recognized, would impact the effective rate. This difference results from adjusting the gross balances for such items as federal, state and foreign deferred items, interest and deductible taxes. We believe it is reasonably possible that the balance of unrecognized tax benefits could decrease by approximately $17 million within the next twelve months due to anticipated settlements of audit issues and expiring statutes of limitations. This amount is included in accrued income taxes in our consolidated balance sheet. The remaining amount is classified as long-term and is included in other noncurrent liabilities in the consolidated balance sheet. Interest and penalties, if any, accrued on the unrecognized tax benefits are reflected in income tax expense. The amount of gross interest and penalties accrued on uncertain tax positions during fiscal years 2011, 2010 and 2009 totaled $4.4 million, $4.1 million and $15.4 million, respectively. The total gross interest and penalties accrued as of April 30, 2011, 2010 and 2009 totaled $44.1 million, $39.7 million and $42.4 million, respectively. We file a consolidated federal income tax return in the U.S. and file tax returns in various state and foreign jurisdictions. The consolidated tax returns for the years 2006 and 2007 are currently under examination by the IRS. The consolidated tax returns for the years 1999 – 2005 are at the IRS appellate level. Tax years prior to 1999 are closed by statute. Historically, tax returns in various foreign and state jurisdictions are examined and settled upon completion of the examination.

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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 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 5: 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 6: 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 7: 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 8: 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=6881521&loc=d3e23780-122690 + Details
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