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Income Taxes | 12 Months Ended
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Dec. 31, 2012
Income Tax Expense (Benefit) [Abstract] |
Income Taxes | INCOME TAXES Income (loss) from continuing operations before income taxes consists of the following:
| Year ended December 31,
Dollar amounts in millions | 2012 |  | 2011 |  | 2010
Domestic | $ | 34.2 |  |  | $ | (149.4 | ) |  | $ | (36.4 | )
Foreign | 5.5 |  |  | (61.6 | ) |  | (17.9 | )
Total | $ | 39.7 |  |  | $ | (211.0 | ) |  | $ | (54.3 | )
The following presents the components of LP’s income tax provision (benefit) from continuing operations.
| Year ended December 31,
Dollar amounts in millions | 2012 |  | 2011 |  | 2010
Current tax provision (benefit): |  |  |  |  |
U.S. federal | $ | 13.2 |  |  | $ | (0.9 | ) |  | $ | (1.1 | )
State and local | 0.6 |  |  | (1.3 | ) |  | 1.1 |
Foreign | 0.9 |  |  | (8.6 | ) |  | (13.4 | )
Net current tax provision (benefit) | 14.7 |  |  | (10.8 | ) |  | (13.4 | )
Deferred tax provision (benefit): |  |  |  |  |
U.S. federal | (7.3 | ) |  | (39.7 | ) |  | (6.7 | )
State and local | — |  |  | (6.1 | ) |  | (3.6 | )
Foreign | (0.3 | ) |  | (11.4 | ) |  | 2.5 |
Net valuation allowance increase (decrease) | 0.5 |  |  | 28.9 |  |  | (0.9 | )
Net deferred tax benefit | (7.1 | ) |  | (28.3 | ) |  | (8.7 | )
Total income tax provision (benefit) | $ | 7.6 |  |  | $ | (39.1 | ) |  | $ | (22.1 | )
LP received income tax refunds during 2012, 2011 and 2010 of $1.9 million, $25.8 million and $51.4 million and paid cash taxes of $1.6 million, $0.8 million and $5.7 million. Included in the Consolidated Balance Sheet at December 31, 2012 and 2011 are income tax receivables of $1.8 million and $3.5 million. The income tax effects of LP’s share of the income or loss of U.S. GreenFiber and Canfor-LP OSB Limited Partnership in 2012, 2011 and 2010 are recorded in “Provision (benefit) for income taxes” on the Consolidated Statements of Income, while LP’s share of such pre-tax income is recorded in “Equity in (income) loss of unconsolidated affiliates”. The tax effects of significant temporary differences creating deferred tax (assets) and liabilities at December 31 were as follows:
| December 31,
Dollar amounts in millions | 2012 |  | 2011
Property, plant and equipment | $ | 148.5 |  |  | $ | 160.9 |
Timber and timberlands | 10.4 |  |  | 11.4 |
Inventories | (6.9 | ) |  | (12.4 | )
Accrued liabilities | (78.9 | ) |  | (81.5 | )
Benefit of capital loss and NOL carryovers | (187.0 | ) |  | (171.7 | )
Benefit of federal & state tax credit carryovers | (13.2 | ) |  | (24.4 | )
Installment sale gain deferral | 163.0 |  |  | 166.7 |
Market value write down of ARS | (8.9 | ) |  | (8.9 | )
Other | (1.4 | ) |  | (4.2 | )
Valuation allowance | 50.7 |  |  | 49.1 |
Net deferred tax liabilities | $ | 76.3 |  |  | $ | 85.0 |
Balance sheet classification |  |  |
Current deferred tax asset | $ | (12.3 | ) |  | $ | (17.0 | )
Long-term deferred tax asset | (5.0 | ) |  | (4.0 | )
Long-term deferred tax liability | 93.6 |  |  | 106.0 |
| $ | 76.3 |  |  | $ | 85.0 |
The $187 million of benefit relating to capital loss and net operating loss (NOL) carryovers included in the above table at December 31, 2012 consists of $77.4 million for federal NOL carryovers which will begin to expire in 2028, $32.8 million (net of federal taxes) for state NOL carryovers and $0.7 million for state capital losses which will expire in various years 2013 through 2032, $63.6 million for Canadian NOL carryovers which will expire starting in 2029 and $12.5 million for Canadian capital loss carryovers which may be carried forward indefinitely. At December 31, 2012, LP has recorded valuation allowances of $15.4 million related to state NOL carryover benefit; $0.7 million related to state capital loss carryover; $20.7 million related to Canadian NOL carryover; $11.3 million against the Canadian capital loss benefit; $1.0 million against the state tax credit carryovers and $1.6 million related to other items. LP periodically reviews the need for valuation allowances against deferred tax assets and recognizes these deferred tax assets to the extent that the realization is more likely than not. Based upon review of earnings history and trends, tax planning strategies already implemented, reversal of deferred tax liabilities and the relevant expiration of carry forwards, LP believes that the valuation allowances provided are appropriate. If future years’ earnings differs from the estimates used to establish these valuation allowances, LP may be required to record an adjustment resulting in an impact on tax expense for that period. As a result of certain realization requirements of ASC 718 Compensation -- Stock Compensation, the table of deferred tax assets and liabilities shown above does not include certain deferred tax assets as of December 31, 2012 that arose directly from tax deductions related to amounts of equity compensation that are greater than the compensation recognized for financial reporting. Equity will be increased by $3.7 million if and when such deferred tax assets are ultimately realized. LP uses tax law ordering when determining when excess tax benefits have been realized. For 2011 and 2010, a current tax cost of $0.6 million and $0.4 million was recognized as a reduction of additional paid in capital arising from tax deductions related to amounts of equity compensation that were less than the compensation recognized for financial reporting. U.S. taxes have not been provided on approximately $45.6 million of undistributed earnings of LP’s foreign subsidiaries, which under existing law are not subject to U.S. tax until distributed as dividends. These earnings have been, and are intended to be, indefinitely reinvested in LP’s foreign operations. Determination of the amount of any unrecognized income tax liability on this temporary difference is not practical because of the complexities of the hypothetical calculation. Furthermore, any taxes paid to the foreign governments on these earnings may be used, in whole or in part, as credits against the U.S. tax on any dividends distributed from such earnings. The following table summarizes the differences between the statutory U.S. federal and effective income tax rates on continuing operations:
| Year ended December 31,
| 2012 |  | 2011 |  | 2010
U.S. Federal tax rate | 35 | % |  | (35 | )% |  | (35 | )%
State and local income taxes | 2 |  |  | (3 | ) |  | (6 | )
Effect of non-deductible goodwill impairments | — |  |  | — |  |  | 9 |
Adjustments to previously recorded deferred tax liabilities | (12 | ) |  | — |  |  | — |
Uncertain tax positions | (1 | ) |  | 5 |  |  | — |
Effect of foreign tax rates / foreign exchange | (3 | ) |  | — |  |  | (11 | )
Valuation allowance | 1 |  |  | 13 |  |  | (1 | )
Other, net | (3 | ) |  | 1 |  |  | 4 |
Effective tax rate (%) | 19 | % |  | (19 | )% |  | (40 | )%
LP and its domestic subsidiaries are subject to U.S. federal income tax as well as income taxes of multiple state jurisdictions. Its foreign subsidiaries are subject to income tax in Canada, Chile, Peru and Brazil. During 2011, the U.S. Internal Revenue Service initiated an audit of tax years 2007 through 2009 for which field work has been completed. LP has protested certain proposed adjustments and requested review by the IRS Appeals Office. All U.S. federal audits of prior years have been completed. LP settled various state income tax audits during 2012 and is subject to various state and local income tax examinations for the tax years 2007 through 2011. Canadian federal income tax returns have been audited and effectively settled through 2004 and no examinations are currently in progress. Quebec provincial audits have been effectively settled through 2011. During 2012, LP settled the audit of tax years 2008 through 2010 with the Chilean Tax Office and an audit of tax year 2011 was initiated. In accordance with the accounting for uncertain tax positions, the following is a tabular reconciliation of the total amount of unrecognized tax benefits at the beginning and end of the years presented:
| December 31,
Dollar amounts in millions | 2012 |  | 2011 |  | 2010
Beginning balance | $ | 23.5 |  |  | $ | 11.3 |  |  | $ | 13.0 |
Increases: |  |  |  |  |
Tax positions taken in current year | 0.1 |  |  | — |  |  | — |
Tax positions taken in prior years | 33.9 |  |  | 12.9 |  |  | 0.7 |
Decreases: |  |  |  |  |
Tax positions taken in current year | — |  |  | (0.3 | ) |  | (0.7 | )
Tax positions taken in prior years | (7.4 | ) |  | (0.2 | ) |  | — |
Settlements during the year | (0.2 | ) |  | (0.2 | ) |  | (1.7 | )
Ending balance | $ | 49.9 |  |  | $ | 23.5 |  |  | $ | 11.3 |
Included in the above balances at December 31, 2012 and 2011 is $11.9 million and $12.4 million of tax benefits that, if recognized, would affect LP’s effective tax rate. LP accrued interest of $1.8 million and $1.2 million during 2012 and 2011, and in total LP has recognized a liability of $5.5 million and $3.7 million for accrued interest related to its uncertain tax positions as of December 31, 2012 and 2011. At this point, it is not possible to reasonably estimate whether the unrecognized tax benefit will change significantly within the next twelve months.

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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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