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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2013
Income Tax Disclosure [Abstract] |
Major Jurisdictions | The following are the major jurisdictions in which Ambac and its affiliates operate and the earliest tax years subject to examination:
Jurisdiction |  | Tax Year |
United States |  |  | 2010 |
New York State |  |  | 2008 |
New York City |  |  | 2011 |
United Kingdom |  |  | 2006 |
Italy |  |  | 2007 |
Significant Portions of Deferred Tax Liabilities and Deferred Tax Assets | The tax effects of temporary differences that give rise to significant portions of the deferred tax liabilities and deferred tax assets at December 31, 2013 and December 31, 2012 are presented below:
|  | Successor Ambac – December 31, 2013 |  |  | Predecessor Ambac – December 31, 2012 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Insurance intangible |  | $ | 559,288 |  |  | $ | — |
Variable interest entities |  |  | 131,137 |  |  |  | 22,015 |
Investments |  |  | 168,653 |  |  |  | — |
Deferred acquisition costs |  |  | — |  |  |  | 57,262 |
Unearned premiums and credit fees |  |  | 38,826 |  |  |  | 22,714 |
Other |  |  | 2,221 |  |  |  | 17,251 |
Total deferred tax liabilities |  |  | 900,125 |  |  |  | 119,242 |
Deferred tax assets: |  |  |  |  |  |  |  |
Unrealized losses & impairments on investments |  |  | — |  |  |  | 12,605 |
Net operating loss and capital carryforward |  |  | 2,177,029 |  |  |  | 2,857,926 |
Loss reserves |  |  | 634,692 |  |  |  | 490,677 |
Compensation |  |  | 8,724 |  |  |  | 7,184 |
AMT Credits |  |  | 4,269 |  |  |  | — |
Other |  |  | 58,581 |  |  |  | 5,687 |
Sub-total deferred tax assets |  |  | 2,883,295 |  |  |  | 3,374,079 |
Valuation allowance |  |  | 1,985,369 |  |  |  | 3,256,423 |
Total deferred tax assets |  |  | 897,926 |  |  |  | 117,656 |
Net deferred tax liability |  | $ | 2,199 |  |  | $ | 1,586 |
Provision for Income Taxes Charged to Income from Continuing Operations | Ambac’s provision for income taxes charged to income from continuing operations is comprised of the following:
|  | Successor Ambac |  |  | Predecessor Ambac |
|  | For the Eight Months Ended December 31, 2013 |  |  | For the Four Months Ended April 30, 2013 |  |  | For the Year Ended December 31, 2012 |
Current taxes |  | $ | 6,984 |  |  | $ | 761 |  |  | $ | 1,263 |
Deferred taxes |  |  | 530 |  |  |  | (6 | ) |  |  | 1,586 |
|  | $ | 7,514 |  |  | $ | 755 |  |  | $ | 2,849 |
Effect of Income Taxes on Net Income and Stockholders' Equity | The total effect of income taxes on net income and stockholders’ equity for the years ended December 31, 2013 and 2012 is as follows:
|  | Successor Ambac |  |  | Predecessor Ambac |
|  | For the Eight Months Ended December 31, 2013 |  |  | For the Four Months Ended April 30, 2013 |  |  | For the Year Ended December 31, 2012 |
Total income taxes charged to net income |  | $ | 7,514 |  |  | $ | 755 |  |  | $ | 2,849 |
Income taxes charged (credited) to stockholders’ equity: |  |  |  |  |  |  |  |  |  |  |  |
Unrealized gains (losses) on investment securities |  |  | 284 |  |  |  | (204,145 | ) |  |  | 18,448 |
Valuation Allowance to Equity |  |  | (284 | ) |  |  | 204,145 |  |  |  | (18,448 | )
Other |  |  | — |  |  |  | — |  |  |  | — |
Total charged to stockholders’ equity: |  |  | — |  |  |  | — |  |  |  | — |
Total effect of income taxes |  | $ | 7,514 |  |  | $ | 755 |  |  | $ | 2,849 |
Effective Tax Rates Differing from Prevailing Federal Corporate Income Tax Rates | The tax provisions in the accompanying Consolidated Statements of Total Comprehensive Loss reflect effective tax rates differing from prevailing Federal corporate income tax rates. The following is a reconciliation of these differences:
|  | Successor Ambac |  |  | Predecessor Ambac |
|  | For the Eight Months Ended December 31, 2013 |  |  | For the Four Months Ended April 30, 2013 |  |  | For the Year Ended December 31, 2012 |
|  | $ |  |  | % |  |  | $ |  |  | % |  |  | $ |  |  | % |
Tax on income from continuing operations at statutory rate |  | $ | 179,311 |  |  |  | 35.0% |  |  | $ | 1,171,812 |  |  |  | 35.0% |  |  | ($ | 89,777) |  |  |  | 35.0% |
Changes in expected tax resulting from: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Reorganization income |  |  | — |  |  |  | 0.0% |  |  |  | (712,581) |  |  |  | (21.3)% |  |  |  | — |  |  |  | — % |
Tax bankruptcy adjustments |  |  | — |  |  |  | 0.0% |  |  |  | 285,734 |  |  |  | 8.5% |  |  |  | — |  |  |  | — % |
IRS Settlement |  |  | — |  |  |  | 0.0% |  |  |  | 370,996 |  |  |  | 11.1% |  |  |  | — |  |  |  | — % |
Tax-exempt interest |  |  | (11,988) |  |  |  | (2.3)% |  |  |  | (4,996) |  |  |  | (0.1)% |  |  |  | (17,795) |  |  |  | 6.9% |
Valuation allowance |  |  | (160,064) |  |  |  | (31.2)% |  |  |  | (1,110,230) |  |  |  | (33.2)% |  |  |  | 107,502 |  |  |  | (41.9)% |
Net addition to (release of) tax reserves |  |  | — |  |  |  | — % |  |  |  | — |  |  |  | — % |  |  |  | — |  |  |  | — % |
Other, net |  |  | 255 |  |  |  | 0.0% |  |  |  | 20 |  |  |  | 0.0% |  |  |  | 2,919 |  |  |  | (1.1)% |
Tax expense on income from continuing operations |  | $ | 7,514 |  |  |  | 1.5% |  |  | $ | 755 |  |  |  | — % |  |  | $ | 2,849 |  |  |  | (1.1)% |
Reconciliation of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits for 2013 and 2012 is as follows:
|  | Successor Ambac |  |  |  |  | Predecessor Ambac |
|  | For the Eight Months Ended December 31, 2013 |  |  |  |  | For the Four Months Ended April 30, 2013 |  |  | For the Year Ended December 31, 2012 |
Balance at January 1, |  | $ | — |  |  |  |  | $ | 96,900 |  |  | $ | 96,900 |
Increases related to prior year tax positions |  |  | — |  |  |  |  |  | — |  |  |  | — |
Decreases related to prior year tax positions(1) |  |  | — |  |  |  |  |  | (96,900 | ) |  |  | — |
Balance at December 31, |  |  | — |  |  |  |  | $ | — |  |  | $ | 96,900 |
(1) | Amount paid in connection with IRS settlement as noted above.
NOL Usage Table | NOL Usage Table
NOL Usage Tier |  | Allocated NOLs |  | Applicable Percentage |
A |  | The first $479,000,000 |  |  | 15 | %
B |  | The next $1,057,000,000 after Tier A |  |  | 40 | %
C |  | The next $1,057,000,000 Tier B |  |  | 10 | %
D |  | The next $1,057,000,000 after Tier C |  |  | 15 | %

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- Definition Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years. + References Reference 1: 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 + Details
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