Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Income Before Income Taxes

Polaris’ income from continuing operations before income taxes was generated from its United States and foreign operations as follows (in thousands):

	For the Years Ended December 31,
	2014		2013		2012
United States	$	666,323	$	535,265	$	458,635
Foreign	32,994		39,164		21,208
Income from continuing operations before income taxes	$	699,317	$	574,429	$	479,843

Components of Provision for Income Taxes

Components of Polaris’ provision for income taxes for continuing operations are as follows (in thousands):

	For the Years Ended December 31,
	2014			2013			2012
Current:
Federal	$	255,299		$	167,690		$	169,833
State	20,438			12,942			15,366
Foreign	21,584			15,457			8,593
Deferred	(52,033		)	(2,729		)	(26,259		)
Total provision for income taxes for continuing operations	$	245,288		$	193,360		$	167,533

Reconciliation of Federal Statutory Income Tax Rate to Effective Tax Rate

Reconciliation of the Federal statutory income tax rate to the effective tax rate is as follows:

	For the Years Ended December 31,
	2014		2013		2012
Federal statutory rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	1.5		1.5		1.8
Domestic manufacturing deduction	(1.1	)	(1.0	)	(1.5	)
Research and development tax credit	(1.1	)	(2.2	)	—
Valuation allowance for foreign subsidiaries net operating losses	—		0.3		—
Other permanent differences	0.8		0.1		(0.4	)
Effective income tax rate for continuing operations	35.1	%	33.7	%	34.9	%

Net Deferred Income Taxes

The net deferred income taxes consist of the following (in thousands):

	December 31,
	2014			2013
Current deferred income taxes:
Inventories	$	9,034		$	6,306
Accrued expenses	104,279			87,157
Derivative instruments	864			(107		)
Total current	114,177			93,356
Noncurrent deferred income taxes:
Cost in excess of net assets of business acquired	(13,111		)	(13,594		)
Property and equipment	(28,921		)	(36,069		)
Compensation payable in common stock	58,446			42,528
Net operating loss carryforwards and impairments	12,693			5,782
Valuation allowance	(6,097		)	(5,059		)
Total noncurrent	23,010			(6,412		)
Total net deferred income tax asset	$	137,187		$	86,944

Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in thousands):

	For the Years Ended December 31,
	2014			2013
Balance at January 1,	$	13,199		$	6,704
Increases due to acquisition opening balance sheet positions	—			6,420
Gross increases for tax positions of prior years	55			561
Gross increases for tax positions of current year	1,456			3,755
Decreases due to settlements and other prior year tax positions	(2,346		)	(3,310		)
Decreases for lapse of statute of limitations	(1,586		)	(1,344		)
Currency translation effect on foreign balances	(942		)	413
Balance at December 31,	9,836			13,199
Reserves related to potential interest at December 31,	732			1,093
Unrecognized tax benefits at December 31,	$	10,568		$	14,292