CPRT » Topics » Income Taxes

These excerpts taken from the CPRT 10-Q filed Jun 9, 2009.

Income Taxes

 

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

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The Company adopted the provisions of Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109 (FIN 48), as of August 1, 2007. For benefits to be realized, a tax position must be more likely than not to be sustained upon examination. The amount recognized is measured as the largest amount of benefit that has a greater than 50 percent likelihood of being realized upon settlement.

 

NOTE 13 — Income Taxes

 

The Company adopted the provisions of FIN 48, as of August 1, 2007. For benefits to be realized, a tax position must be more likely than not to be sustained upon examination. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement.

 

As of April 30, 2009, the total gross unrecognized tax benefits increased by $8.9 million from $12.2 million to $21.1 million. The increase was related to a reclassification of an $8.6 million receivable from the total gross unrecognized tax benefit.

 

As of April 30, 2009, the gross amounts of the Company’s liabilities for unrecognized tax benefits were classified as long term income taxes payable and as long term receivables, respectively, in the accompanying consolidated balance sheet. Over the next twelve months, the Company’s existing positions will continue to generate an increase in liabilities for unrecognized tax benefits, as well as a likely decrease in liabilities as a result of the lapse of the applicable statute of limitations and the conclusion of income tax audits. The expected decrease in FIN 48 liabilities will have a positive effect on the Company’s consolidated results of operations and financial position when realized. The Company recognized interest and penalties related to uncertain tax positions in income tax expense. The amount of interest and penalties accrued as of April 30, 2009 was approximately $1.8 million.

 

The Company files income tax returns in the US federal jurisdiction, various states, Canada and the United Kingdom. The Company is currently under audit by the Internal Revenue Service, State of New York, State of Connecticut and State of California.  With some exceptions, the Company is no longer subject to US federal, state and local, or non-US income tax examinations by tax authorities for years prior to fiscal year 2005. At this time, the Company does not believe that the outcome of any examination will have a material impact on the Company’s consolidated results of operations and financial position.

 

The Company has not provided US federal income and foreign withholding taxes from undistributed earnings of its foreign operations, including Copart UK, because it plans to permanently reinvest the earnings of its foreign operations as of April 30, 2009. If these earnings were distributed, foreign tax credits may become available under current law to reduce or eliminate the resultant US income tax liability.

 

Income Taxes.  Our effective income tax rates for three months ended April 30, 2009 and 2008 were approximately 38.5% and 34.4%, respectively. The increase was driven primarily by the decrease of favorable tax adjustments such as tax exempt interest income, the decrease of unrecognized tax benefits released due to the lapse of statute of limitations for fiscal year 2005 tax returns filed, as well as the increase of certain states’ income tax liabilities.

 

Discontinued Operations.  During the quarter we received a $12 million payment for a note receivable resulting from the sale of certain MAG business assets and real estate.  We exited the MAG business in our 2006 fiscal year. The gain on the sale of the real estate was deferred until payment on the note receivable was received.  The $1.6 million of income from discontinued operations represents that gain, net of taxes.

 

Income Taxes.  Our effective income tax rates for nine months ended April 30, 2009 and 2008 were approximately 38.8% and 36.1%, respectively. The increase was driven primarily by the decrease of favorable tax adjustments such as tax exempt interest income and the decrease of unrecognized tax benefits released due to the lapse of statute of limitations for fiscal year 2005 tax returns filed, as well as the increase of certain states’ income tax liabilities.

 

Discontinued Operations.  During the nine months ended April 30, 2009, we received a $12 million payment for a note receivable relating to the sale of certain MAG business assets and real estate.  We exited the MAG business in our 2006 fiscal year. The gain on the sale of the real estate was deferred until payment was received.  The $1.6 million of income from discontinued operations represents that gain, net of taxes.

 

These excerpts taken from the CPRT 10-Q filed Mar 12, 2009.

Income Taxes

 

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

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Table of Contents

 

The Company adopted the provisions of Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109 (FIN 48), as of August 1, 2007. For benefits to be realized, a tax position must be more likely than not to be sustained upon examination. The amount recognized is measured as the largest amount of benefit that has a greater than 50 percent likelihood of being realized upon settlement.

 

NOTE 12 — Income Taxes

 

The Company adopted the provisions of FIN 48, as of August 1, 2007. For benefits to be realized, a tax position must be more likely than not to be sustained upon examination. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement.

 

As of January 31, 2009, the total gross unrecognized tax benefits increased by $1.4 million from $12.2 million to $13.6 million.

 

As of January 31, 2009 and 2008, the gross amount of the Company’s liabilities for unrecognized tax benefits were classified as long-term income taxes payable in the accompanying consolidated balance sheet. Over the next twelve months, the Company’s existing positions will continue to generate an increase in liabilities for unrecognized tax benefits, as well as a likely decrease in liabilities as a result of the lapse of the applicable statute of limitations and the conclusion of income tax audits. The decrease in FIN 48 liabilities will have a positive effect on the Company’s consolidated results of operations and financial position when realized.

 

The Company files income tax returns in the US federal jurisdiction, various states, Canada and the United Kingdom. The Company is currently under audit by the Internal Revenue Service, State of New York, State of Connecticut and State of California.  With some exceptions, the Company is no longer subject to US federal, state and local, or non-US income tax examinations by tax authorities for years prior to fiscal year 2005. At this time, the Company does not believe that the outcome of any examination will have a material impact on the Company’s consolidated results of operations and financial position.

 

The Company has not provided US federal income and foreign withholding taxes from undistributed earnings of its foreign operations, including Copart UK, because it plans to permanently reinvest the earnings of its foreign operations as of January 31, 2009. If these earnings were distributed, foreign tax credits may become available under current law to reduce or eliminate the resultant U.S. income tax liability.

 

Income Taxes.  Our effective income tax rates for three months ended January 31, 2009 and 2008 were approximately 38.5% and 36.7%, respectively. The increase was driven primarily by the decrease of favorable tax adjustments such as tax exempt interest income and the increase in certain states’ income tax liabilities, and the lesser tax benefit generated in jurisdictions where a lower statutory tax rate was imposed.

 

Income Taxes.  Our effective income tax rates for six months ended January 31, 2009 and 2008 were approximately 39.0% and 37.1%, respectively. The increase was driven primarily by the decrease of favorable tax adjustments such as tax exempt interest income, the increase in certain states’ income tax liabilities, and the lesser tax benefit generated in jurisdictions where a lower statutory tax rate was imposed.

 

This excerpt taken from the CPRT 10-Q filed Dec 10, 2008.
Income Taxes.  Our effective income tax rates for three months ended October 31, 2008 and 2007 were approximately 39.2% and 37.5%, respectively. The increase was driven primarily by the decrease of favorable tax adjustments such as tax exempt interest income and the increase in certain states’ income tax liabilities.

 

These excerpts taken from the CPRT 10-K filed Sep 29, 2008.

Income Taxes

        Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

        The Company adopted the provisions of Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109 (FIN 48), as of August 1, 2007. For benefits to be realized, a tax position must be more likely than not to be sustained upon examination. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement.

        As a result of the Company's adoption of FIN 48, the Company recognized a $3.6 million cumulative decrease to retained earnings. The Company also recognized a liability for unrecognized tax benefits of $13.3 million, of which $9.1 million (net of tax) would reduce the Company's effective tax rate if recognized in future periods. The interest and penalties, if any, related to unrecognized tax benefits are recorded in income tax expense. As of August 1, 2007, the Company had $2.6 million of accrued interest and penalties included in unrecognized tax benefits.

Income Taxes





        Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and
tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.



        The
Company adopted the provisions of Financial Interpretation No. 48,
Accounting for Uncertainty in Income Taxes—an Interpretation of FASB
Statement No. 109
(FIN 48), as of August 1, 2007. For benefits to be realized, a tax position must be more likely than not to be sustained upon
examination. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement.




        As
a result of the Company's adoption of FIN 48, the Company recognized a $3.6 million cumulative decrease to retained earnings. The Company also recognized a liability for
unrecognized tax benefits of $13.3 million, of which $9.1 million (net of tax) would reduce the Company's effective tax rate if recognized in future periods. The interest and penalties,
if any, related to unrecognized tax benefits
are recorded in income tax expense. As of August 1, 2007, the Company had $2.6 million of accrued interest and penalties included in unrecognized tax benefits.





This excerpt taken from the CPRT 10-Q filed Jun 9, 2008.
Income Taxes.  Our global income tax rates for the nine months ended April 30, 2008 and 2007 were approximately 36.1% and 37.4%, respectively. The decrease resulted from a downward adjustment of $1.7 million to tax reserves due to the lapse of the statute of limitations for fiscal year 2004 tax returns.

 

This excerpt taken from the CPRT 10-Q filed Mar 11, 2008.
Income Taxes.  Our effective combined federal, state and local income tax rates for the six months ended January 31, 2008 and 2007 were approximately 37.1% and 37.4%, respectively.

 

This excerpt taken from the CPRT 10-Q filed Dec 10, 2007.
Income Taxes.  Our effective combined federal, state and local income tax rates for three months ended October 31, 2007 and 2006 were approximately 37.5% and 37.2%, respectively.

This excerpt taken from the CPRT 10-K filed Oct 1, 2007.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

This excerpt taken from the CPRT 8-K filed Apr 23, 2007.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

This excerpt taken from the CPRT 10-Q filed Dec 11, 2006.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

This excerpt taken from the CPRT 10-K filed Oct 31, 2006.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

This excerpt taken from the CPRT 10-K filed Oct 14, 2005.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

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