MA » Topics » Income Taxes

These excerpts taken from the MA 8-K filed Jul 31, 2009.

Income Taxes

The change in control severance payments and benefits provided hereunder are subject to all applicable foreign, federal, state, and local tax withholding and generally are taxable income to the Eligible Employee.

Income Taxes

Accrued payments and Severance Payments are subject to all applicable federal, state, and local tax withholding and generally are taxable income to the Eligible Member.

These excerpts taken from the MA 10-Q filed May 1, 2009.

Note 15. Income Taxes

The effective income tax rate was 33.2% and 35.1% for the three months ended March 31, 2009 and 2008, respectively. The rate for the three months ended March 31, 2009 was lower than the comparable period in 2008 due primarily to an adjustment to the Company’s balance of deferred taxes during the three months ended March 31, 2009.

During the three months ended March 31, 2009, the Company’s unrecognized tax benefits related to tax positions increased by $11,400, all of which would affect the Company’s effective tax rate, if recognized.

 

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MASTERCARD INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

(In thousands, except per share and percent data)

 

Income Taxes

The effective income tax rate was 33.2% and 35.1% for the three months ended March 31, 2009 and 2008, respectively. The rate for the three months ended March 31, 2009 is lower than the comparable period in 2008, primarily due to an adjustment during the quarter to the Company’s balance of deferred taxes.

During the three months ended March 31, 2009, the Company’s unrecognized tax benefits related to tax positions taken in the current period increased by $11.4 million, all of which would affect the Company’s effective tax rate if recognized.

This excerpt taken from the MA 10-Q filed Nov 4, 2008.

Income Taxes

The effective income tax rates were a 34.1% benefit and a 34.8% expense for the three months ended September 30, 2008 and 2007, respectively, and a 40.4% benefit and a 35.1% expense for the nine months ended September 30, 2008 and 2007, respectively. The decrease in the effective tax rate in the three months ended September 30, 2008 versus the comparable period in 2007 was primarily due to the tax benefit related to the charge for the Discover Settlement, partially offset by a tax charge in the three months ended September 30, 2008 for the remeasurement of deferred tax assets as a result of a change in the Company’s estimated effective state tax rate. As a result of the remeasurement, the Company’s deferred tax assets were reduced by $20 million with a corresponding increase in income tax expense. The increase in the effective tax rate in the nine months ended September 30, 2008 versus the comparable period in 2007 was primarily due to the tax benefits related to the charges for the Discover Settlement and the American Express Settlement, partially offset by the tax charge in the three months ended September 30, 2008 for the remeasurement of deferred tax assets. The effect of the charges significantly changed the geographic distribution of pre-tax income (loss) from jurisdictions with lower tax rates to those with higher tax rates.

In addition, the charge for the Discover Settlement, recognized for book purposes in September 2008, will be deductible for tax purposes in 2008 when the payment is made. Accordingly, an income tax refund receivable has been recorded for $256 million related to the recovery of estimated tax payments made previously in 2008.

The Company’s GAAP effective income tax rate for the three month and nine month periods ended September 30, 2008, were significantly affected by the tax benefit related to the charge for the American Express and Discover Settlements. Due to the non-recurring nature of the American Express and Discover Settlements, the Company believes that the calculation of the 2008 effective tax rate, exclusive of the charge, will be helpful in comparing effective tax rates for the three and nine months ended September 30, 2008.

 

     GAAP
Actual
    GAAP
Effective
Tax Rate
   Litigation
Settlements
   Non-GAAP
Adjusted
   Adjusted
Effective

Tax Rate
Non-GAAP
     (In millions, except percentages)

Three months ended September 30, 2008:

             

Income (loss) before income taxes

   $ (294 )   34.1%    $ 828    $ 534    39.7%

Income tax expense (benefit)

     (100 )        312      212   
                           

Net income (loss)

   $ (194 )      $ 516    $ 322   
                           
     GAAP
Actual
    GAAP
Effective
Tax Rate
   Litigation
Settlements
   Non-GAAP
Adjusted
   Adjusted
Effective

Tax Rate
Non-GAAP
     (In millions, except percentages)

Nine months ended September 30, 2008:

             

Income (loss) before income taxes

   $ (828 )   40.4%    $ 2,477    $ 1,649    36.6%

Income tax expense (benefit)

     (335 )        939      604   
                           

Net income (loss)

   $ (493 )      $ 1,538    $ 1,045   
                           

 

* Note that the figures in the preceding table may not sum or recalculate due to rounding

 

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This excerpt taken from the MA 10-Q filed Aug 1, 2008.

Income Taxes

The Company’s effective income tax rates were 39.0% and 43.9% for the three and six months ended June 30, 2008, respectively, versus 34.7% and 35.3%, respectively, for the comparable periods in 2007. The increase in the effective tax rate in both periods was primarily due to the tax benefit related to the charge for the American Express Settlement. The effect of the charge significantly changed the geographic distribution of pre-tax income (loss) from jurisdictions with lower tax rates to those with higher tax rates.

Due to the non-recurring nature of the American Express Settlement, the Company believes that the calculation of the 2008 effective tax rate, exclusive of the charge, will be helpful in comparing effective tax rates for the three and six months ended June 30, 2008 and 2007.

 

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     GAAP
Actual
    GAAP
Effective
Tax Rate
    Litigation
Settlement
   Non-GAAP
Adjusted
   Non-GAAP
Effective
Tax Rate
 
     (In millions, except percentages)  

Three months ended June 30, 2008:

            

Income (loss) before income taxes

   $ (1,223 )   39.0 %   $ 1,649    $ 426    35.3 %

Income tax expense (benefit)

     (477 )       627      150   
                          

Net income (loss)

   $ (747 )     $ 1,022    $ 276   
                          

Six months ended June 30, 2008:

            

Income (loss) before income taxes

   $ (535 )   43.9 %   $ 1,649    $ 1,114    35.2 %

Income tax expense (benefit)

     (235 )       627      392   
                          

Net income (loss)

   $ (300 )     $ 1,022    $ 722   
                          

 

* Note that the figures in the preceding table may not sum or recalculate due to rounding
This excerpt taken from the MA 10-Q filed Apr 29, 2008.

Income Taxes

The effective income tax rate was 35.1% and 36.0% for the three months ended March 31, 2008 and 2007, respectively. The rate for the three months ended March 31, 2008 is lower than the comparable period in 2007 due to the effect of higher pre-tax income in 2008 on the relative impact of the permanent differences between book and taxable income. The overall benefit is driven primarily by lower proportional tax expense for uncertain tax positions, and certain higher foreign statutory tax benefits, offset by the lower proportional benefit from tax exempt income. In addition, the effective tax rate in 2007 included the impact of non-deductible charitable contributions.

During the three months ended March 31, 2008 the company’s unrecognized tax benefits related to tax positions taken in the current period increased by $13 million, all of which would affect the effective tax rate if recognized.

 

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This excerpt taken from the MA 10-Q filed Oct 31, 2007.

Income Taxes

Our effective income tax rate was 34.8% and 33.9% for the three months ended September 30, 2007 and 2006, respectively, and 35.1% and 95.9% for the nine months ended September 30, 2007, and 2006, respectively. For the nine months ended September 30, 2006, our effective income tax rate included the impact of the $395 million charitable contribution of shares of Class A common stock to the Foundation. This contribution was recorded as an expense in the consolidated statement of operations; however it is not deductible for tax purposes. This resulted in a significant impact on our effective tax rate for the nine months ended September 30, 2006 as follows:

 

     GAAP
Actual
  

GAAP

Effective

Tax Rate

    Stock
Donation
   Non-GAAP
Adjusted
  

Non-GAAP

Effective

Tax Rate

 

Nine months ended September 30, 2006:

             

Income before income taxes

   $ 224    95.9 %   $ 395    $ 619    34.6 %

Income tax expense1

     215           214   
                     

Net Income

   $ 9         $ 405   
                     

1

Income tax expense has been calculated with and without the impact of the stock donation to the Foundation.

For the three months ended September 30, 2007 and 2006, the change in the effective income tax rate primarily relates to a net increase for the accrual of income tax liabilities for uncertain tax positions, as required under the recently adopted FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an Interpretation of Financial Accounting Standards Board (“FASB”) Statement 109” (“FIN 48”). For the nine months ended September 30, 2007 and 2006, apart from the contribution of Class A common stock to the Foundation, the change in the effective income tax rate primarily relates to the effect of a New York state tax law change and a net increase in the accrual of income tax liabilities for uncertain tax positions. The New York state tax law change resulted in a reduction in the Company’s state income tax rate. See Note 13 to the Consolidated Financial Statements included in Item 1.

 

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This excerpt taken from the MA 10-Q filed Aug 1, 2007.

Income Taxes

Our effective income tax rate was 34.7% and 19.1% for the three months ended June 30, 2007 and 2006, respectively, and 35.3% and 171.5% for the six months ended June 30, 2007, and 2006, respectively. For the three and six months ended June 30, 2006, our effective income tax rate included the impact of the $395 million charitable contribution of shares of Class A common stock to the Foundation. This contribution was recorded as an expense in the statement of operations; however it is not deductible for tax purposes. This resulted in a significant impact on our effective tax rate for the three and six months ended June 30, 2006 as follows:

 

     GAAP
Actual
   

GAAP

Effective

Tax Rate

    Stock
Donation
   Non- GAAP
Adjusted
  

Non- GAAP

Effective

Tax Rate

 
Three months ended June 30, 2006:             

Income (Loss) before income taxes

   $ (261 )   19.1 %   $ 395    $ 134    33.6 %

Income tax expense1

     50            45   
                      

Net Income (Loss)

   $ (310 )        $ 89   
                      
Six months ended June 30, 2006:             

Income (Loss) before income taxes

   $ (68 )   171.5 %   $ 395    $ 327    34.0 %

Income tax expense1

     116            111   
                      

Net Income (Loss)

   $ (184 )        $ 216   
                      

* Note that the figures in the preceding table may not sum due to rounding

1

Income tax expense has been calculated with and without the impact of the Class A common stock donation to the Foundation.

The effective income tax rates for the three and six months ended June 30, 2007 (34.7% and 35.3%, respectively) are higher than the comparable 2006 non-GAAP effective tax rates in the table above (33.6% and 34.0%, respectively) primarily due to an increase in the accrual of state income tax liabilities for uncertain tax positions as required under the recently adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes”. In addition, there was a one-time increase to state income tax expense attributable to the revaluation of deferred state income taxes resulting from changes in New York tax laws, which was offset by the effect of a federal income tax audit settlement. See Note 13 to the Consolidated Financial Statements included in Item 1.

 

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This excerpt taken from the MA 10-Q filed May 2, 2007.

Income Taxes

The effective income tax rate was 36.0% and 34.3% for the three months ended March 31, 2007 and 2006, respectively. The rate for the three months ended March 31, 2007 is higher than the comparable period in 2006 primarily due to an increase in the accrual of state income tax liabilities for uncertain tax positions as required under the recently adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes”. See Note 9 to the Consolidated Financial Statements included in Item 1.

This excerpt taken from the MA 10-Q filed Nov 1, 2006.

Income Taxes

Our effective tax rate for the nine months ended September 30, 2006 includes the impact of the $395 charitable contribution of MasterCard Class A common shares to the Foundation. This contribution was recorded as an expense in the income statement, however, it is not deductible for tax purposes. This resulted in a significant impact on our effective tax rate as follows:

 

     GAAP
Actual
  

GAAP

Effective

Tax Rate

    Stock
Donation
   Non-GAAP
Adjusted
  

Non-GAAP

Effective

Tax Rate

 

Nine months ended September 30, 2006:

             

Income before income taxes

   $ 224    95.9 %   $ 395    $ 619    34.6 %

Income tax expense1

     215           214   
                     

Net Income

   $ 9         $ 405   
                     

1 Income tax expense has been calculated with and without the impact of the stock donation to the Foundation.

 

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This excerpt taken from the MA 10-Q filed Aug 2, 2006.

Income Taxes

Our effective tax rate for the three and six months ended June 30, 2006 includes the impact of the $395 charitable contribution of MasterCard Class A common shares to the MasterCard Foundation. This contribution was recorded as an expense in the income statement however it is not deductible for tax purposes. This resulted in a significant impact on our effective tax rate as follows:

 

     GAAP
Actual
   

GAAP

Effective

Tax Rate

    Stock
Donation
   Non-GAAP
Adjusted
  

Non-GAAP

Effective

Tax Rate

 

Three months ended June 30, 2006:

            

Income (Loss) before income taxes

   $ (261 )   19.1 %   $ 395    $ 134    33.6 %

Income tax expense1

     50            45   
                      

Net Income (Loss)

   $ (311 )        $ 89   
                      

Six months ended June 30, 2006:

            

Income (Loss) before income taxes

   $ (68 )   171.5 %   $ 395    $ 327    34.0 %

Income tax expense1

     116            111   
                      

Net Income (Loss)

   $ (184 )        $ 216   
                      

1 Income tax expense has been calculated with and without the impact of the stock donation.

 

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This excerpt taken from the MA 10-Q filed May 2, 2006.

Income Taxes

The effective income tax rate was 34.3% and 35.3% for the three months ended March 31, 2006 and 2005. The rate in 2006 is lower than 2005 primarily due to favorable developments with respect to foreign tax audits which occurred in the three months ended March 31, 2006. As discussed in more detail under the heading “Proposed New Ownership and Governance Structure”, MasterCard expects to record a significant expense equal to the value of Class A common shares and cash we donate to the Foundation. These donations will generally not be deductible to MasterCard for tax purposes. Accordingly, as a result of the difference between financial statement and tax treatments of the donations, we expect there to be a significant increase to our effective income tax rate in the periods in which the contributions are made.

This excerpt taken from the MA 10-Q filed Nov 3, 2005.

Income Taxes

 

The effective tax rate for the three and nine months ended September 30, 2005 was 35.3% and 35.5%, respectively, compared to 30.7% and 31.3% for the three and nine months ended September 30, 2004, respectively. The lower effective tax rate in the nine months ended September 30, 2004 was attributable to the reassessment during this period of tax issues under examination in the IRS audit for the years 1998 through 2000. In addition, in the course of this audit affirmative refund claims were filed and the related tax benefits were recognized.

 

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