Note 8 – Income Tax

The components of income tax expense (benefit) for the three and nine months ended September 30, 2014 and 2013 consisted of the following:


	Three months ended September 30,						Nine months ended September 30,
(Dollar amounts in thousands)	2014			2013			2014			2013
Current tax provision	$	2,138		$	1,830		$	6,691		$	3,120
Deferred tax benefit		(1,056	)		(472	)		(1,486	)		(6,723	)

Income tax expense (benefit)	$	1,082		$	1,358		$	5,205		$	(3,603	)

The Company conducts operations in Puerto Rico and certain countries in Latin America. As a result, the income tax expense includes the effect of taxes paid to the Puerto Rico government as well as foreign jurisdictions. The following table presents the components of income tax expense (benefit) for the three and nine months ended September 30, 2014 and 2013 and its segregation based on location of operations:


	Three months ended September 30,						Nine months ended September 30,
(Dollar amounts in thousands)	2014			2013			2014			2013
Current tax provision (benefit)
Puerto Rico	$	1,687		$	1,456		$	3,047		$	1,712
United States		(923	)		24			(508	)		453
Foreign countries		1,374			350			4,152			955

Total currrent tax provision (benefit)	$	2,138		$	1,830		$	6,691		$	3,120

Deferred tax benefit
Puerto Rico	$	(518	)	$	(422	)	$	314		$	(6,378	)
United States		(138	)		(1	)		(141	)		(3	)
Foreign countries		(400	)		(49	)		(1,659	)		(342	)

Total deferred tax benefit	$	(1,056	)	$	(472	)	$	(1,486	)	$	(6,723	)

Taxes payable to foreign countries by EVERTEC’s subsidiaries will be paid by such subsidiary and the corresponding liability and expense will be presented in EVERTEC’s consolidated financial statements.

As of September 30, 2014, the gross deferred tax asset amounted to $10.6 million and the gross deferred tax liability amounted to $27.9 million, compared with $13.5 million and $31.7 million as of December 31, 2013. At September 30, 2014, the recorded value of the Company’s net operating loss (“NOL”) carryforwards was $7.9 million. The recorded value of the NOL carryforwards is approximately $6.3 million lower than the total NOL carryforwards available because of a windfall tax benefit. The windfall tax benefit is available to offset future taxable income and is considered an off-balance sheet item until the deduction reduces taxes payable. This windfall tax benefit results from tax deductions that were in excess of previously recorded compensation expense because the fair value of stock options at the time they were granted differed from their fair value when they were exercised. The total gross NOL carryforwards available, including the windfall benefit, amounted to $47.0 million as of September 30, 2014.

There are no open uncertain tax positions as of September 30, 2014.