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Income Taxes | 12 Months Ended
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Dec. 31, 2014
Income Tax Disclosure [Abstract] |
Income Taxes | Deferred income taxes are the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. We have not recognized deferred US income taxes on the undistributed earnings of foreign subsidiaries and affiliates that we intend to permanently reinvest in foreign operations. The cumulative amount of such earnings was $727.7 million at December 31, 2014. The ultimate tax cost of repatriating these earnings depends on tax laws in effect and other circumstances at the time of distribution. The following table shows the significant components of our deferred tax liabilities and assets as of December 31 (in millions):
| 2014 |  | 2013
Deferred Tax Liabilities |  |  |
Book/tax basis difference due to depreciation | $ | 963.8 |  |  | $ | 852.0 |
Investments in affiliated companies | 99.7 |  |  | 93.7 |
Lease accounting | 10.5 |  |  | 24.4 |
Other | 0.1 |  |  | — |
Total deferred tax liabilities | 1,074.1 |  |  | 970.1 |
Deferred Tax Assets |  |  |
Federal net operating loss | 41.8 |  |  | 8.9 |
Alternative minimum tax credit | 9.2 |  |  | 8.4 |
Foreign tax credit | 3.6 |  |  | 3.6 |
Valuation allowance on foreign tax credit | (3.6 | ) |  | (3.6 | )
State net operating loss | 28.7 |  |  | 27.1 |
Valuation allowance on state net operating loss | (11.3 | ) |  | (11.2 | )
Foreign net operating loss | 5.8 |  |  | 8.5 |
Valuation allowance on foreign net operating loss | (0.2 | ) |  | (0.2 | )
Accruals not currently deductible for tax purposes | 18.7 |  |  | 14.1 |
Allowance for losses | 1.7 |  |  | 2.2 |
Pension and post-retirement benefits | 32.6 |  |  | 13.3 |
Other | 9.8 |  |  | 7.6 |
Total deferred tax assets | 136.8 |  |  | 78.7 |
Net deferred tax liabilities | 937.3 |  |  | $ | 891.4 |
At December 31, 2014, we have a US federal tax net operating loss carryforward of $119.3 million that will expire in 2033. We also have an alternative minimum tax credit of $9.2 million that has an unlimited carryforward period. At December 31, 2014, we have foreign tax credits of $3.6 million that are scheduled to expire beginning in 2016. We have recorded a $3.6 million valuation allowance related to these credits, as we believe it is more likely than not that we will be unable to utilize them. We also have state net operating losses of $28.7 million, net of federal benefits that are scheduled to expire at various times beginning in 2015. We have recorded an $11.3 million valuation allowance related to state net operating losses, as we believe it is more likely than not that we will be unable to use all of these losses. Additionally, we have foreign net operating losses, net of valuation allowances, of $5.6 million which have unlimited carryforward periods. Our use of future tax credits and net operating losses depends on a number of variables, including the amount of taxable income, foreign source income attributes, and state apportionment factors. The following table shows a reconciliation of the beginning and ending amount of our gross liability for unrecognized tax benefits (in millions)
| 2014 |  | 2013
Beginning balance | $ | 5.7 |  |  | $ | 4.7 |
Reductions due to settlement of tax audit issues | (0.4 | ) |  | — |
Additions to tax positions for prior years | 0.3 |  |  | 1.0 |
Ending balance | $ | 5.6 |  |  | $ | 5.7 |
At December 31, 2014, our gross liability for unrecognized tax benefits was $5.6 million, of which $3.6 million, if recognized, would favorably impact income tax expense. During the year ended December 31, 2014, we settled a tax audit recognizing a tax benefit of $0.4 million. Additionally, in 2014, we added a gross state tax liability of $0.3 million (net tax expense impact of $0.2 million). During the year ended December 31, 2013, we added a gross state tax liability of $1.0 million (net tax expense impact of $0.6 million). We recognize interest and penalties related to unrecognized tax benefits as income tax expense. We have not accrued any amounts for penalties. To the extent interest is not assessed or is otherwise reduced with respect to uncertain tax positions, we will record any required adjustment as a reduction of income tax expense. We file one consolidated federal income tax return with our domestic subsidiaries in the US jurisdiction, as well as tax returns in various state and foreign jurisdictions. As of December 31, 2014, all audits with respect to our federal tax returns for years prior to 2010 have been closed. However, GATX and our subsidiaries are undergoing audits in various state and foreign jurisdictions. The following table shows the components of income before income taxes, excluding affiliates, for the years ending December 31 (in millions):
| 2014 |  | 2013 |  | 2012
Domestic | $ | 137.9 |  |  | $ | 66.0 |  |  | $ | 80.5 |
Foreign | 93.3 |  |  | 93.0 |  |  | 63.3 |
| $ | 231.2 |  |  | $ | 159.0 |  |  | $ | 143.8 |
The following table shows income taxes, excluding domestic and foreign joint ventures, for the years ending December 31 (in millions):
| 2014 |  | 2013 |  | 2012
Current |  |  |  |  |
Domestic: |  |  |  |  |
Federal | $ | 0.7 |  |  | $ | 1.4 |  |  | $ | (8.8 | )
State and local | 0.6 |  |  | — |  |  | 2.5 |
| 1.3 |  |  | 1.4 |  |  | (6.3 | )
Foreign | 13.0 |  |  | 10.5 |  |  | 8.0 |
| 14.3 |  |  | 11.9 |  |  | 1.7 |
Deferred |  |  |  |  |
Domestic: |  |  |  |  |
Federal | 45.0 |  |  | 36.6 |  |  | 16.0 |
State and local | 5.6 |  |  | 5.3 |  |  | (3.1 | )
| 50.6 |  |  | 41.9 |  |  | 12.9 |
Foreign | 10.8 |  |  | 11.7 |  |  | 11.5 |
| 61.4 |  |  | 53.6 |  |  | 24.4 |
Income taxes | $ | 75.7 |  |  | $ | 65.5 |  |  | $ | 26.1 |
The following table shows the differences between our effective income tax rate and the federal statutory income tax rate for the years ending December 31 (in millions):
| 2014 |  | 2013 |  | 2012
Income taxes at federal statutory rate | $ | 80.9 |  |  | $ | 55.6 |  |  | $ | 50.4 |
Adjust for effect of: |  |  |  |  |
GATX income taxes on sale of AAE | — |  |  | 23.2 |  |  | — |
Foreign tax credits | — |  |  | (3.9 | ) |  | (13.7 | )
Foreign earnings taxed at lower rates | (8.5 | ) |  | (10.3 | ) |  | (4.1 | )
Tax effect of foreign dividends | — |  |  | — |  |  | 6.3 |
Expiration of the applicable statute of limitations | — |  |  | — |  |  | (15.5 | )
Corporate owned life insurance | (0.6 | ) |  | (0.5 | ) |  | (0.3 | )
State income taxes | 4.1 |  |  | 1.5 |  |  | 1.9 |
Other | (0.2 | ) |  | (0.1 | ) |  | 1.1 |
Income taxes | $ | 75.7 |  |  | $ | 65.5 |  |  | $ | 26.1 |
Effective income tax rate | 32.7 | % |  | 41.2 | % |  | 18.2 | %
In 2014, our effective tax rate was 32.7% compared to 41.2% in 2013 and 18.2% in 2012. The prior year effective tax rate reflects incremental US and state income taxes of $23.2 million that we incurred on the sale of our investment in AAE. Additionally, we realized foreign tax credit carryforwards of $3.9 million. In 2012, we recognized a $15.5 million benefit attributable to previously unrecognized tax benefits resulting from the expiration of the applicable statute of limitations. Additionally, the 2012 tax provision benefited from the utilization of $13.7 million in foreign tax credits partially offset by $6.3 million of tax expenses associated with foreign dividends repatriated during the year. The adjustment for foreign earnings in each year reflects the impact of lower tax rates on income earned at our foreign subsidiaries. State income taxes are recognized on domestic pretax income or loss. The amount of our domestic income subject to state taxes relative to our total worldwide income impacts the effect state income tax has on our overall income tax rate. Separately, income taxes for our affiliates were $18.3 million in 2014, $16.5 million in 2013, and $2.0 million in 2012. These amounts were favorably impacted by deferred tax benefits of $7.6 million in 2013 and $4.6 million in 2012, which were the result of income tax rate reductions enacted in the United Kingdom.

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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 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: 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 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 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 Reference 6: 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 + Details
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