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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

The provision for income taxes consists of the following:

	Year Ended December 31,
	2014			2013			2012
Current:
Federal	$	148,221		$	137,675		$	76,599
State		28,881			30,352			3,066
Deferred:
Federal		(4,451	)		(13,402	)		13,086
State		(735	)		(2,406	)		1,738
	$	171,916		$	152,219		$	94,489

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,

2014

2013

2012

Income tax benefits arising from compensation expense for

tax purposes in excess of amounts recognized for financial

statement purposes

9,437

20,636

14,319

Deferred Income Taxes on Consolidated Balance Sheets

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

	December 31,
	2014		2013
Deferred tax assets:
Other accrued expenses and contract land deposit reserve	$	84,817	$	90,372
Deferred compensation		7,500		8,049
Equity-based compensation expense		46,257		35,298
Inventory		11,153		11,099
Unrecognized tax benefit		24,485		23,784
Other		5,847		4,200
Total deferred tax assets		180,059		172,802
Less: deferred tax liabilities		7,371		4,290
Net deferred tax position	$	172,688	$	168,512

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,
	2014			2013			2012
Income taxes computed at the federal statutory rate	$	158,741		$	146,544		$	96,277
State income taxes, net of federal income tax benefit		18,800			18,210			3,226
Other, net		(5,625	)		(12,535	)		(5,014	)
	$	171,916		$	152,219		$	94,489

Reconciliation of Unrecognized Tax Benefits

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

	Year Ended December 31,
	2014			2013
Balance at beginning of year	$	43,796		$	40,244
Additions based on tax positions related to the current year		6,008			5,618
Reductions for tax positions of prior years		(3,800	)		(2,066	)
Settlements		—			—
Balance at end of year	$	46,004		$	43,796

- 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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