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Income Taxes | 12 Months Ended
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Dec. 31, 2014
Income Taxes |
Income Taxes | Note 6 Income Taxes Income taxes attributable to continuing operations for the years ended December 31, 2014, 2013 and 2012 differed from the amounts computed by applying the statutory U.S. Federal income tax rate of 35% to earnings before income taxes excluding non-controlling interest for the following reasons:
|  | Years ended December 31, |
(Thousands of dollars) |  | 2014 |  | 2013 |  | 2012 |
Computed “expected” tax expense excluding non-controlling interest |  | $ | 186,574 |  | $ | 83,190 |  | $ | 128,275 |
Adjustments to tax expense attributable to: |  |  |  |  |  |  |
Foreign tax differences |  | 4,314 |  | 1,808 |  | (36,139 | )
Tax-exempt income |  | (8,793 | ) | (33,183 | ) | (62 | )
State income taxes, net of federal benefit |  | 10,021 |  | 3,139 |  | 658 |
Federal tax credits |  | (11,765 | ) | (21,095 | ) | (1,693 | )
Change in pension deferred tax |  | (331 | ) | (397 | ) | (1,252 | )
Domestic manufacturing deduction |  | (10,667 | ) | (1,488 | ) | (5,643 | )
Other |  | (1,554 | ) | 476 |  | 46 |
Total income tax expense |  | $ | 167,799 |  | $ | 32,450 |  | $ | 84,190 |
Certain of Seaboard’s foreign operations are subject to no income tax or a tax rate which is considerably lower than the U.S. corporate tax rate. Fluctuation of earnings or losses incurred from certain foreign operations conducting business in these jurisdictions can impact the mix of taxable earnings for each fiscal year. The treatment of biodiesel production credits as tax-exempt income was clarified by the U.S. Internal Revenue Service (IRS) in 2013 for 2013 and prior years and thus the amount of benefit recognized in 2013 above includes $16,523,000 for related refund claims for prior years not previously treated as tax-exempt. Earnings before income taxes consisted of the following:
|  | Years ended December 31, |
(Thousands of dollars) |  | 2014 |  | 2013 |  | 2012 |
United States |  | $ | 471,744 |  | $ | 164,285 |  | $ | 178,821 |
Foreign |  | 61,325 |  | 73,401 |  | 187,680 |
Total earnings excluding non-controlling interest |  | 533,069 |  | 237,686 |  | 366,501 |
Less: net income attributable to non-controlling interest |  | (730 | ) | (1,529 | ) | (277) |
Total earnings before income taxes |  | $ | 533,799 |  | $ | 239,215 |  | $ | 366,778 |
The components of total income taxes were as follows:
|  | Years ended December 31, |
(Thousands of dollars) |  | 2014 |  | 2013 |  | 2012 |
Current: |  |  |  |  |  |  |
Federal |  | $ | 111,120 |  | $ | (33,679 | ) | $ | 68,928 |
Foreign |  | 19,729 |  | 28,048 |  | 31,149 |
State and local |  | 11,505 |  | 3,093 |  | 6,507 |
Deferred: |  |  |  |  |  |  |
Federal |  | 19,953 |  | 24,698 |  | (16,818 | )
Foreign |  | 976 |  | 5,575 |  | (935 | )
State and local |  | 4,516 |  | 4,715 |  | (4,641 | )
Income tax expense |  | 167,799 |  | 32,450 |  | 84,190 |
Unrealized changes in other comprehensive income |  | (26,835 | ) | 10,318 |  | (9,197 | )
Total income taxes |  | $ | 140,964 |  | $ | 42,768 |  | $ | 74,993 |
As of December 31, 2014 and 2013, Seaboard had income taxes receivable of $49,298,000 and $60,456,000, respectively, primarily related to domestic tax jurisdictions, and had income taxes payable of $4,673,000 and $2,974,000, respectively, primarily related to foreign tax jurisdictions. Components of the net deferred income tax liability at the end of each year were as follows:
|  | December 31, |
(Thousands of dollars) |  | 2014 |  | 2013 |
Deferred income tax liabilities: |  |  |  |  |
Depreciation |  | $ | 107,091 |  | $ | 114,519 |
Domestic partnerships |  | 48,592 |  | 29,871 |
LIFO |  | 42,193 |  | 17,212 |
Cash basis farming adjustment |  | 9,763 |  | 9,983 |
Other |  | 4,391 |  | 4,300 |
|  | $ | 212,030 |  | $ | 175,885 |
Deferred income tax assets: |  |  |  |  |
Reserves/accruals |  | $ | 110,662 |  | $ | 83,408 |
Deferred earnings of foreign subsidiaries |  | 34,853 |  | 24,266 |
Net operating and capital loss carry-forwards |  | 18,853 |  | 17,725 |
Tax credit carry-forwards |  | 14,760 |  | 14,933 |
Other |  | 3,569 |  | 3,535 |
|  | 182,697 |  | 143,867 |
Valuation allowance |  | 20,558 |  | 17,869 |
Net deferred income tax liability |  | $ | 49,891 |  | $ | 49,887 |
Seaboard recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense. For the years ended December 31, 2014, 2013 and 2012, such interest and penalties were not material. The Company had approximately $3,097,000 and $2,120,000 accrued for the payment of interest and penalties on uncertain tax positions at December 31, 2014, and 2013, respectively. As of December 31, 2014 and 2013, Seaboard had $6,888,000 and $7,301,000, respectively, in total unrecognized tax benefits all of which, if recognized, would affect the effective tax rate. Seaboard does not have any material uncertain tax positions in which it is reasonably possible that the total amounts of the unrecognized tax benefits will significantly increase or decrease within 12 months of the reporting date. The following table is a reconciliation of the beginning and ending amount of unrecognized tax benefits:
(Thousands of dollars) |  | 2014 |  | 2013 |
Beginning balance at January 1 |  | $ | 7,301 |  | $ | 5,053 |
Additions for uncertain tax positions of prior years |  | 454 |  | 2,300 |
Decreases for uncertain tax positions of prior years |  | (288) |  | (238) |
Additions for uncertain tax positions of current year |  | 44 |  | 422 |
Lapse of statute of limitations |  | (623) |  | (236) |
Ending balance at December 31 |  | $ | 6,888 |  | $ | 7,301 |
Seaboard’s tax returns are regularly audited by federal, state and foreign tax authorities, which may result in material adjustments. Seaboard’s U.S. federal income tax years’ are closed through 2009. The IRS examination of Seaboard’s 2010 U.S. income tax return has been finalized. The jurisdictions that most significantly impact Seaboard’s effective tax rate are the United States and Argentina. As of December 31 2014, Seaboard had not provided for U.S. Federal Income and foreign withholding taxes on $999,524,000 of undistributed earnings from foreign operations, as Seaboard intends to reinvest such earnings indefinitely outside of the United States. Determination of the tax that might be paid on these undistributed earnings if eventually remitted is not practical. If Seaboard decided at a later date to repatriate these earnings to the U.S., Seaboard would be required to provide for the net tax effects on these amounts. Management believes Seaboard’s future taxable income will be sufficient for full realization of the net deferred tax assets. The valuation allowance relates to the tax benefits from foreign net operating losses. Management does not believe these benefits are more likely than not to be realized due to limitations imposed on the deduction of these losses. At December 31, 2014, Seaboard had foreign net operating loss carry-forwards of approximately $51,876,000 a portion of which expire in varying amounts between 2015 and 2032, while others have indefinite expiration periods. At December 31, 2014, Seaboard had state tax credit carry-forwards of approximately $22,708,000, net of valuation allowance, all of which carry-forward indefinitely. Seaboard has certain investments in various limited partnerships as a limited partner that are expected to enable Seaboard to obtain certain low income housing tax credits over a period of approximately ten years. Seaboard uses the proportional amortization method of accounting for all of its qualified affordable housing project investments by amortizing the initial cost of the investment in proportion to the income tax credits received and recognizing the net investment performance in the Comprehensive Statements of Income as a component of income tax expense. The amounts of affordable housing tax credits and other tax benefits and related amortization expense recognized as components of income tax expense were not material for the years ended December 31, 2014, 2013 and 2012. The balance of these investments recognized on the Consolidated Balance Sheets as of December 31, 2014 and 2013 was $11,625,000 and $13,189,000, respectively. On December 19, 2014, the Tax Increase Prevention Act of 2014 (the 2014 Tax Act) was signed into law. The 2014 Tax Act extended many expired corporate income tax provisions through December 31, 2014 which impacted current and deferred income taxes for financial reporting purposes. The total annual effects of the provisions in the new law on current and deferred taxes assets and liabilities for Seaboard were recorded in the fourth quarter of 2014. The impact was a tax benefit of $11,410,000, or $9.68 per common share, recorded primarily related to certain income tax credits. In addition to this amount was a credit of $15,450,000 for the Federal blender’s credits for 2014 that was recognized as revenues in the fourth quarter of 2014. See Note 12 for further discussion of this Federal blender’s credit. Since the 2014 Tax Act only extended these tax provisions, including the Federal blender’s credits, through December 31, 2014, future legislation would be required to extend these expired tax provisions. On January 2, 2013, the American Taxpayer Relief Act of 2012 (the Tax Act) was signed into law. The Tax Act extended many expired corporate income tax provisions that impact current and deferred taxes for financial reporting purposes. In accordance with U.S. GAAP, the determination of current and deferred taxes is based on the provisions of the enacted law as of the balance sheet date; the effects of future changes in tax law are not anticipated. The effects of changes in tax laws, including retroactive changes, are recognized in the financial statements in the period that the changes are enacted. Accordingly, as the Tax Act was signed into law in 2013, the effects of the retroactive provisions in the new law on current and deferred taxes assets and liabilities for Seaboard were recorded in the first quarter of 2013. The total impact was a one-time tax benefit of $7,945,000 recorded in the first quarter of 2013 related to certain 2012 income tax credits. In addition to this amount was a credit of approximately $11,260,000 for 2012 Federal blender’s credits that was recognized as revenues in the first quarter of 2013. See Note 12 for further discussion of this Federal blender’s credit.

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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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