XML 56 R15.htm IDEA: XBRL DOCUMENT v2.4.0.8
Income Taxes
9 Months Ended
Sep. 30, 2014
Income Tax Disclosure [Abstract]  
Income Taxes [Text Block]
INCOME TAXES:
The United States Short Line Tax Credit is an income tax track maintenance credit for Class II and Class III railroads to reduce their federal income tax based on qualified railroad track maintenance expenditures. Qualified expenditures include amounts incurred for maintaining track, including roadbed, bridges and related track structures owned or leased by a Class II or Class III railroad. The credit is equal to 50% of the qualified expenditures, subject to an annual limitation of $3,500 multiplied by the number of miles of railroad track owned or leased by the Class II or Class III railroad as of the end of its tax year. The United States Short Line Tax Credit was in existence from 2005 through 2011. On January 2, 2013, the United States Short Line Tax Credit was extended for 2012 and 2013. The extension of the United States Short Line Tax Credit produced book income tax benefits of $6.8 million and $59.2 million for the three and nine months ended September 30, 2013, respectively. The total tax credit impact in the nine months ended September 30, 2013 included $41.0 million for the retroactive fiscal year 2012 tax benefit and $18.3 million associated with the nine months ended September 30, 2013. Since the extension became law in 2013, the 2012 impact was recorded in the first quarter of 2013.
The Company's effective income tax rate in the three months ended September 30, 2014 was 33.6%, compared with 25.1% in the three months ended September 30, 2013. The Company's provision for income taxes for the three months ended September 30, 2014 included a $3.9 million tax benefit as a result of receiving consent from the Internal Revenue Service (IRS) to change tax accounting methods retroactively for companies acquired as a result of the RailAmerica acquisition. The Company's effective income tax rate in the nine months ended September 30, 2014 was 34.8%. The Company's provision for income taxes for the nine months ended September 30, 2014 included a $1.0 million tax benefit as a result of adjusting the Company's deferred income taxes to reflect the impact of the RCP&E acquisition and a $3.9 million tax benefit as a result of receiving consent from the IRS to change tax accounting methods retroactively for companies acquired as a result of the RailAmerica acquisition. Excluding the $41.0 million retroactive income tax benefit from the United States Short Line Tax Credit, the Company's provision for income taxes for the nine months ended September 30, 2013 was $63.5 million, which other than the retroactive benefit from the United States Short Line Tax Credit, represented 26.8% of income before income taxes. The increase in the effective income tax rates for the three and nine months ended September 30, 2014 was primarily attributable to the expiration of the United States Short Line Tax Credit on December 31, 2013. The Company’s effective income tax rates also included adjustments to reflect differences between book income tax expense and final tax returns filed in September of each year related to the previous fiscal year, which the Company does not consider material.