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Note 22 INCOME TAXES
 12 Months Ended
Dec. 31, 2012
Income Tax Disclosure [Text Block]
NOTE 22 INCOME TAXES

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


    2012     2011     2010  
Domestic   $ 176,075     $ 118,708     $ 33,394  
Foreign     81,433       4,287       5,760  
    $ 257,508     $ 122,995     $ 39,154  

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


    2012     2011     2010  
Current:                        
Federal   $ 10,621     $ 13,894     $ 8,836  
State     (759 )     (195 )     1,049  
Foreign     2,968       1,079       2,033  
      12,830       14,778       11,918  
Deferred:                        
Federal     62,704       29,440       (6,953 )
State     (431 )     368       (145 )
Foreign     1,482       86       725  
Provision for valuation allowance on deferred tax assets     —       —       —  
      63,755       29,894       (6,373 )
Total   $ 76,585     $ 44,672     $ 5,545  

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:


    2012     2011     2010  
Expected income tax expense at statutory rate   $ 90,127     $ 43,049     $ 13,704  
Differences between expected and actual income tax expense:                        
State tax, after Federal tax benefit     (1,184 )     254       610  
Tax effect of Altisource Separation     —       —       749  
Provision for (reversal of) liability for selected tax items     5,558       1,611       (9,126 )
Permanent differences     15       61       878  
Foreign tax differential     (17,816 )     (716 )     (197 )
Provision-to-return and other     —       —       (580 )
Other     (115 )     413       (493 )
Actual income tax expense   $ 76,585     $ 44,672     $ 5,545  

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


    2012     2011  
Deferred tax assets:                
Mortgage servicing rights amortization   $ —     $ 32,654  
Net operating loss carryforward     16,068       18,078  
Net unrealized gains and losses on securities     2,702       11,828  
Partnership losses     11,036       9,960  
Bad debt and allowance for loan losses     6,551       8,020  
Accrued other liabilities     2,925       5,122  
Interest rate swaps     3,813       4,371  
Tax residuals and deferred income on tax residuals     4,175       3,941  
Stock-based compensation expense     3,127       2,874  
Accrued incentive compensation     6,210       2,755  
Foreign deferred assets     1,805       2,512  
Accrued lease termination costs     1,887       1,910  
Intangible asset amortization     2,070       1,641  
Valuation allowance on real estate     386       884  
Deferred income or loss on servicing advance receivables     78,832       —  
Capital losses     665       —  
Other     7,339       8,608  
      149,591       115,158  
Deferred tax liabilities:                
Mortgage servicing rights amortization     56,265       —  
Deferred income or loss on servicing advance receivables     —       7,030  
Other     1,190       160  
      57,455       7,190  
Net deferred tax assets   $ 92,136     $ 107,968  

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, 2012 and 2011.


We recognized total interest and penalties of $(75), $1,257 and $182 in 2012, 2011 and 2010, respectively. At December 31, 2012 and 2011, accruals for interest and penalties were $1,561 and $1,636, respectively. As of December 31, 2012 and 2011, we had a total liability for selected tax items of $21,140 and $4,524, 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:


    2012     2011  
Balance at January 1   $ 4,524     $ 2,913  
Additions based on tax positions related to current year     17,396       —  
Additions for tax positions of prior years     875       1,817  
Reductions for tax positions of prior years     —       (206 )
Lapses in statutes of limitation     (93 )     —  
Balance at December 31   $ 22,702     $ 4,524  

At December 31, 2012, we had a net operating loss carryforward tax benefit of $45,909 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 $5,742. These carryforwards will expire beginning 2019 through 2024. We have a $1,725 capital loss carry forward. We have no remaining capital loss carryforwards or tax credit carryforwards related to low-income housing tax credits.