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Income Taxes (Notes)
9 Months Ended
Sep. 30, 2014
Income Taxes [Abstract]  
Income Tax Disclosure
Income Taxes

Income tax expense during interim periods is based on our estimated annual effective income tax rate plus any discrete items which are recorded in the period in which they occur. Discrete items include, among others, such events as changes in estimates due to the finalization of tax returns, tax audit settlements, expiration of statute of limitations, and increases or decreases in valuation allowances on deferred tax assets. Our effective tax rate was 81.7% and 40.3% for the three months ended September 30, 2014 and 2013, respectively. Our effective tax rate was 60.0% and 38.5% for the nine months ended September 30, 2014 and 2013, respectively. The higher effective tax rate for the nine months ended September 30, 2014 is above the 35% federal statutory tax rate primarily due to nondeductible goodwill resulting in gains on required divestitures associated with the Stewart acquisition coupled with state tax expense partially offset by lower rates on foreign earnings.
Unrecognized Tax Benefits
As of September 30, 2014, the gross amount of our unrecognized tax benefits was $135.4 million and the gross amount of our accrued interest was $46.9 million. Additional interest expense of $2.3 million was accrued during the nine months ended September 30, 2014.
A number of years may elapse before particular tax matters, for which we have unrecognized tax benefits, are settled. While we have effectively concluded our 2003 through 2005 tax years with respect to our affiliate SCI Funeral & Cemetery Purchasing Cooperative, Inc., SCI and subsidiaries' tax years 1999 through 2005 remain under review at the IRS Appeals level. SCI and subsidiaries received a letter of no change to its tax liability for the years 2008 through 2010. Furthermore, SCI and its affiliates are under audit by various state and foreign jurisdictions for years through 2012. The outcome of each of these audits cannot be predicted at this time. It is reasonably possible that the amount of our unrecognized tax benefits could significantly increase or decrease over the next twelve months either because we prevail on positions or because the tax authorities prevail. Due to the uncertainty regarding the timing of completion of audits and possible outcomes, a current estimate of the range of increases or decreases that may occur within the next twelve months cannot be made.