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NOTE 23 INCOME TAXES
 12 Months Ended
Dec. 31, 2011
Income Tax Disclosure [Text Block]

NOTE 23 INCOME TAXES


For income tax purposes, the domestic and foreign components of income from continuing operations before taxes were as follows for the years ended December 31:


   

2011

   

2010

   

2009

 
Domestic   $ 118,708     $ 33,394     $ 89,847  
Foreign     4,287       5,760       3,414  
    $ 122,995     $ 39,154     $ 93,261  

The components of income tax expense (benefit) on continuing operations were as follows for the years ended December 31:


   

2011

   

2010

   

2009

 
Current:                  
Federal   $ 13,894     $ 8,836     $ 51,341  
State     (195 )     1,049       300  
Foreign     1,079       2,033       933  
      14,778       11,918       52,574  
Deferred:                        
Federal     29,440       (6,953 )     40,067  
State     368       (145 )     4,564  
Foreign     86       725       (1,095 )
Provision for valuation allowance on deferred tax assets     —       —       —  
      29,894       (6,373 )     43,536  
Total   $ 44,672     $ 5,545     $ 96,110  

Income tax expense differs from the amounts computed by applying the U.S. Federal corporate income tax rate of 35% as follows for the years ended December 31:


   

2011

   

2010

   

2009

 
Expected income tax expense at statutory rate   $ 43,049     $ 13,704     $ 32,641  
Differences between expected and actual income tax expense:                        
Indefinite deferral on earnings of non-U.S. affiliates     —       —       (1,006 )
State tax, after Federal tax benefit     254       610       5,274  
Low-income housing tax credits     —       —       (23 )
Tax effect of Altisource Separation     —       749       48,577  
Provision for (reversal of) liability for selected tax items     1,611       (9,126 )     11,196  
Permanent differences     61       878       —  
Foreign tax differential     (716 )     (197 )     (161 )
Provision-to-return and other     —       (580 )     —  
Stock-based compensation tax expense     —       —       (510 )
Other     413       (493 )     122  
Actual income tax expense   $ 44,672     $ 5,545     $ 96,110  

Net deferred tax assets were comprised of the following at December 31:


   

2011

   

2010

 
Deferred tax assets:            
Mortgage servicing rights amortization   $ 32,654     $ 41,532  
Net operating loss carryforward     18,078       20,087  
Net unrealized gains and losses on securities     11,828       11,397  
Partnership losses     9,960       8,007  
Bad debt and allowance for loan losses     8,020       7,716  
Accrued other liabilities     5,122       9,901  
Interest rate swaps     4,371       5,196  
Tax residuals and deferred income on tax residuals     3,941       3,847  
State taxes     —       3,456  
Stock-based compensation expense     2,874       2,460  
Accrued incentive compensation     2,755       2,610  
Foreign deferred assets     2,512       2,598  
Accrued lease termination costs     1,910       2,728  
Intangible asset amortization     1,641       2,276  
Valuation allowance on real estate     884       1,258  
Deferred income or loss on servicing advance receivables     —       2,745  
Capital losses     —       8,455  
Other     8,608       2,609  
      115,158       138,878  
Deferred tax liabilities:                
Deferred income or loss on servicing advance receivables     7,030       —  
Other     160       162  
      7,190       162  
Net deferred tax assets   $ 107,968     $ 138,716  

We conduct periodic evaluations of positive and negative evidence to determine whether it is more likely than not that the deferred tax asset can be realized in future periods. Among the factors considered in this evaluation are estimates of future taxable income, future reversals of temporary differences, tax character and the impact of tax planning strategies that may be implemented, if warranted. As a result of this evaluation, we concluded that no valuation allowance was necessary at December 31, 2011 and 2010.


We recognized total interest and penalties of $1,257, $182 and $278 in 2011, 2010 and 2009, respectively. At December 31, 2011 and 2010, accruals for interest and penalties were $1,636 and $379, respectively. As of December 31, 2011 and 2010, we had a total liability for selected tax items of $4,524 and $2,913, respectively, all of which if recognized would affect the effective tax rate.


Our major jurisdiction tax years that remain subject to examination are our U.S. federal tax return for the years ended December 31, 2008 through the present and our India corporate tax returns for the years ended March 31, 2004 through the present. Our U.S. federal tax return for the years ended December 31, 2008 and 2009 are currently under examination. A reconciliation of the beginning and ending amount of the liability for selected tax items is as follows for the years ended December 31:


   

2011

   

2010

 
Balance at January 1   $ 2,913     $ 15,326  
Additions based on tax positions related to current year     —       683  
Additions for tax positions of prior years     1,817       105  
Reductions for tax positions of prior years     (206 )     (8,884 )
Lapses in statutes of limitation     —       (4,317 )
Balance at December 31   $ 4,524     $ 2,913  

At December 31, 2011, we a had net operating loss carryforward tax benefit of $18,078 that related to realized built-in losses from the acquisition of Ocwen Asset Investment Corporation in 1999.  Utilization of these carryforwards is subject to an annual IRC section 382 limitation of $5,700. These carryforwards will expire beginning 2019 through 2024. We have no remaining capital loss carryforwards or tax credit carryforwards related to low-income housing tax credits.