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Income Taxes | 12 Months Ended
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Dec. 31, 2013
Income Taxes |
Income Taxes | 13. Income Taxes Deferred tax assets and liabilities are provided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the consolidated balance sheets. These temporary differences result in taxable or deductible amounts in future years. The components of the Company's deferred tax assets and liabilities are as follows:
Year ended December 31, |  | 2013 |  | 2012 |
--- | --- | --- | --- | --- | ---
|  | (in thousands) |
Deferred tax assets: |  |  |  |  |  |  |
Stock-based compensation expense |  | $ | 51,045 |  | $ | 48,098 |
Accrued expenses |  |  | 57,387 |  |  | 64,047 |
Intangibles |  |  | 43,204 |  |  | — |
Deferred tax assets resulting from unrecognized tax benefits |  |  | 10,817 |  |  | 10,839 |
Net operating losses |  |  | 4,690 |  |  | 6,935 |
Accumulated other comprehensive loss |  |  | 1,863 |  |  | 2,709 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Gross deferred tax assets |  |  | 169,006 |  |  | 132,628 |
Less valuation allowance |  |  | (3,664 | ) |  | (3,221 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net deferred tax assets |  |  | 165,342 |  |  | 129,407 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Deferred tax liabilities: |  |  |  |  |  |  |
Property, plant and equipment |  |  | (102,379 | ) |  | (174,285 | )
Investments in unconsolidated affiliates |  |  | (5,782 | ) |  | — |
Intangibles |  |  | — |  |  | (131,686 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net deferred tax liabilities |  |  | (108,161 | ) |  | (305,971 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net: |  | $ | 57,181 |  | $ | (176,564 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Reflected on consolidated balance sheets: |  |  |  |  |  |  |
Current deferred tax assets, net |  | $ | 71,093 |  | $ | 39,793 |
Noncurrent deferred tax liabilities, net |  |  | (13,912 | ) |  | (216,357 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net deferred taxes |  | $ | 57,181 |  | $ | (176,564 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
For income tax reporting, the Company has gross state net operating loss carryforwards aggregating approximately $170 million available to reduce future state income taxes, primarily for the Commonwealth of Pennsylvania and the States of Mississippi, Delaware, Colorado and Ohio as of December 31, 2013. The tax benefit associated with these net operating loss carryforwards is approximately $4.4 million. Due to state tax statutes on annual net operating loss utilization limits, the availability of gaming tax credits and income and loss projections in the applicable jurisdictions, a $3.4 million valuation allowance has been recorded to reflect the net operating losses which are not presently expected to be realized. If not used, substantially all the carryforwards will expire at various dates from December 31, 2014 to December 31, 2032. In addition, certain subsidiaries have accumulated gross state net operating loss carryforwards aggregating approximately $1.4 billion for which no benefit has been recorded as they are attributable to uncertain tax positions. The unrecognized tax benefits as of December 31, 2013 attributable to these net operating losses was approximately $86.3 million. Due to the uncertain tax position, these net operating losses are not included as components of deferred tax assets as of December 31, 2013. In the event of any benefit from realization of these net operating losses, $9.7 million would be treated as an increase to equity, and the remainder would be treated as a reduction of tax expense. If not used, substantially all the carryforwards will expire at various dates from December 31, 2014 to December 31, 2032. As discussed in Note 9, in the fourth quarter of 2013, the Company incurred a pre-tax goodwill and other intangible asset impairment charge of $738.8 million and $319.6 million, respectively. This caused the Company to be in a cumulative pre-tax loss position for the past three years. Absent this charge, Penn would have recorded pre-tax earnings of $142.5 million and the Company had significant levels of pre-tax earnings in both 2012 and 2011. The Company considered this cumulative loss for book purposes and concluded that itsdeferred tax assets were more likely than not to be realized and accordingly no valuation allowance was required due to the fact that this impairment charge is not anticipated to impact future earning levels to a point that would call into question the realizability of the Company's deferred tax assets. The provision for income taxes charged to operations for the years ended December 31, 2013, 2012 and 2011 was as follows:
Year ended December 31, |  | 2013 |  | 2012 |  | 2011 |
--- | --- | --- | --- | --- | --- | --- | ---
|  | (in thousands) |
Current tax expense (benefit) |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 96,537 |  | $ | 96,490 |  | $ | 106,982 |
State |  |  | 2,200 |  |  | 14,448 |  |  | 23,392 |
Foreign |  |  | 4,708 |  |  | (3,366 | ) |  | (5,053 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total current |  |  | 103,445 |  |  | 107,572 |  |  | 125,321 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Deferred tax (benefit) expense |  |  |  |  |  |  |  |  |  |
Federal |  |  | (207,337 | ) |  | 44,874 |  |  | 24,893 |
State |  |  | (17,646 | ) |  | 109 |  |  | (3,333 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total deferred |  |  | (224,983 | ) |  | 44,983 |  |  | 21,560 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total income tax (benefit) provision |  | $ | (121,538 | ) | $ | 152,555 |  | $ | 146,881 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
The following table reconciles the statutory federal income tax rate to the actual effective income tax rate for 2013, 2012 and 2011:
Year ended December 31, |  | 2013 |  | 2012 |  | 2011 |
--- | --- | --- | --- | --- | --- | --- | ---
Percent of pretax (loss) income |  |  |  |  |  |  |  |  |  |
Federal taxes |  |  | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State and local income taxes |  |  | 1.1 | % |  | 1.4 | % |  | 3.4 | %
Permanent differences |  |  | (22.7 | )% |  | 5.3 | % |  | 2.2 | %
Foreign |  |  | (0.1 | )% |  | 0.2 | % |  | (1.6 | )%
Other miscellaneous items |  |  | 0.0 | % |  | (0.1 | )% |  | (1.3 | )%
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  |  | 13.3 | % |  | 41.8 | % |  | 37.7 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Year ended December 31, |  | 2013 |  | 2012 |  | 2011 |
--- | --- | --- | --- | --- | --- | --- | ---
|  | (in thousands) |
Amount based upon pretax (loss) income |  |  |  |  |  |  |  |  |  |
Federal taxes |  | $ | (320,557 | ) | $ | 127,584 |  | $ | 136,205 |
State and local income taxes |  |  | (9,677 | ) |  | 5,044 |  |  | 13,398 |
Permanent differences |  |  | 207,928 |  |  | 19,223 |  |  | 8,405 |
Foreign |  |  | 1,200 |  |  | 886 |  |  | (6,223 | )
Other miscellaneous items |  |  | (432 | ) |  | (182 | ) |  | (4,904 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  | $ | (121,538 | ) | $ | 152,555 |  | $ | 146,881 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
A reconciliation of the beginning and ending amount for the liability for unrecognized tax benefits is as follows:
|  | Noncurrent tax liabilities |
--- | --- | --- | ---
|  | (in thousands) |
Balance at December 31, 2011 |  | $ | 33,872 |
Additions based on current year positions |  |  | 2,465 |
Additions based on prior year positions |  |  | 5,919 |
Payments made on account |  |  | (13,123 | )
Decreases due to settlements and/or reduction in liabilities |  |  | (9,639 | )
​ | ​ | ​ | ​ | ​
Currency translation adjustments |  |  | 899 |
​ | ​ | ​ | ​ | ​
Balance at December 31, 2012 |  |  | 20,393 |
Additions based on current year positions |  |  | 5,875 |
Additions based on prior year positions |  |  | 1,056 |
Decreases due to settlements and/or reduction in reserves |  |  | (5,536 | )
Currency translation adjustments |  |  | (1,822 | )
​ | ​ | ​ | ​ | ​
Balance at December 31, 2013 |  | $ | 19,966 |
​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​
During the year ended December 31, 2013, the Company recorded $5.9 million of tax reserves and accrued interest related to current year uncertain tax positions. In regards to prior year tax positions, the Company recorded $1.1 million of tax reserves and accrued interest and reversed $5.1 million and $0.5 million of previously recorded tax reserves and accrued interest, respectively, for uncertain tax positions that have settled and/or closed. Overall, the Company recorded a net tax expense of $1.4 million in connection with its uncertain tax positions for the year ended December 31, 2013. Included in the liability for unrecognized tax benefits at December 31, 2013 and 2012 were $21.3 million and $19.9 million, respectively, of tax positions that, if reversed, would affect the effective tax rate. Included in the liability for unrecognized tax benefits at December 31, 2013 and 2012 were $1.8 million of currency translation gains for foreign currency tax positions and $0.9 million of currency translation losses for foreign currency tax positions. The Company is required under ASC 740 to disclose its accounting policy for classifying interest and penalties, the amount of interest and penalties charged to expense each period, as well as the cumulative amounts recorded in the consolidated balance sheets. The Company will continue to classify any income tax-related penalties and interest accrued related to unrecognized tax benefits in taxes on income within the consolidated statements of operations. During the years ended December 31, 2013 and 2012, the Company recognized approximately $0.7 million and $88 thousand, respectively, of interest and penalties, net of deferred taxes. In addition, due to settlements and/or reductions in previously recorded liabilities, the Company had reductions in previously accrued interest and penalties of $0.3 million, net of deferred taxes. These accruals are included in noncurrent tax liabilities and prepaid expenses within the consolidated balance sheets at December 31, 2013 and 2012, respectively. The Company is currently in various stages of the examination process in connection with its open audits. Generally, it is difficult to determine when these examinations will be closed, but the Company reasonably expects that its ASC 740 liabilities will not significantly change over the next twelve months. As of December 31, 2013, the Company is subject to U.S. federal income tax examinations for the tax years 2010, 2011, and 2012. In addition, the Company is subject to state and local income tax examinations for various tax years in the taxing jurisdictions in which the Company operates. At December 31, 2013 and 2012, prepaid expenses within the consolidated balance sheets included prepaid income taxes of $39.4 million and $68.4 million, respectively.

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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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