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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

The provision for income taxes consists of the following:


	Year Ended December 31,
	2013			2012		2011
*Current:*
Federal	$	137,675		$	76,599	$	45,112
State		30,352			3,066		8,004

*Deferred:*
Federal		(13,402	)		13,086		21,492
State		(2,406	)		1,738		3,548

	$	152,219		$	94,489	$	78,156

Income Tax Benefits in Shareholders' Equity

In addition to amounts applicable to income before taxes, the following income tax benefits were recorded in shareholders’ equity:


	Year Ended December 31,
	2013		2012		2011
Income tax benefits arising from compensation expense for tax purposes in excess of amounts recognized for financial statement purposes	$	20,636	$	14,319	$	22,835

Deferred Income Taxes on Consolidated Balance Sheets

Deferred income taxes on NVR’s consolidated balance sheets were comprised of the following:


	December 31,
	2013		2012
Deferred tax assets:
Other accrued expenses and contract land deposit reserve	$	90,372	$	77,475
Deferred compensation		8,049		10,923
Equity-based compensation expense		35,298		26,151
Inventory		11,099		10,914
Unrecognized tax benefit		23,784		22,295
Other		4,200		5,606

Total deferred tax assets		172,802		153,364
Less: deferred tax liabilities		4,290		1,702

Net deferred tax position	$	168,512	$	151,662

Income Tax Expense Reconciliation

A reconciliation of income tax expense in the accompanying consolidated statements of income to the amount computed by applying the statutory federal income tax rate of 35% to income before taxes is as follows:


	Year Ended December 31,
	2013			2012			2011
Income taxes computed at the federal statutory rate	$	146,544		$	96,277		$	72,652
State income taxes, net of federal income tax benefit		18,210			3,226			7,974
Other, net		(12,535	)		(5,014	)		(2,470	)

	$	152,219		$	94,489		$	78,156

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


	Year Ended December 31,
	2013			2012
Balance at beginning of year	$	40,244		$	45,049
Additions based on tax positions related to the current year		5,618			4,185
Reductions for tax positions of prior years		(2,066	)		(8,928	)
Settlements		—			(62	)

Balance at end of year	$	43,796		$	40,244

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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