Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Schedule of Components of Income Tax Expense (Benefit)

The components of our provision (benefit) for income taxes on income from continuing operations for the years ended December 31, 2014 (Successor) and December 31, 2013 (Successor), the successor period from September 29, 2012 through December 31, 2012, the predecessor period from January 1, 2012 through September 28, 2012 are as follows ($ amounts in thousands):



	For the Year Ended			For the Year Ended			For the period
	December 31, 2014			December 31, 2013			September 29, 2012 to December 31, 2012			January 1, 2012 to September 28, 2012
	(Successor)			(Successor)			(Successor)			(Predecessor)
Current income tax provision (benefit):
Federal		$53,532			$20,200			$3,531			$21,878
State	917			187			176			(5,284		)
Foreign	1,300			973			230			833
	55,749			21,360			3,937			17,427
Deferred income tax (benefit) provision:
Federal	(127,160		)	(80,691		)	(20,660		)	12,982
State	(1,582		)	(1,851		)	(930		)	(829		)
Foreign	—			—			—			(50		)
	(128,742		)	(82,542		)	(21,590		)	12,103
		($72,993	)		($61,182	)		($17,653	)		$29,530

Schedule of Deferred Tax Assets and (Liabilities)

Deferred tax assets and (liabilities) as of December 31, 2014, and 2013 are as follows ($ amounts in thousands):



	December 31, 2014			December 31, 2013
	(Successor)			(Successor)
Deferred tax assets:
Accounts receivable		$61,580			$35,298
Inventories	15,945			12,670
Litigation settlements and contingencies	—			12,241
Accrued and prepaid expenses	8,506			8,219
Net operating losses and other carryforwards	19,475			15,015
Stock options and restricted shares	7,221			4,097
Other	3,782			4,790
	116,509			92,330
Less valuation allowance	(19,381		)	(12,322		)
Total deferred tax assets	97,128			80,008

Deferred tax liabilities:
Fixed assets	(21,358		)	(20,621		)
Deferred financing cost	(13,823		)	(20,842		)
Intangible assets	(240,675		)	(275,399		)
Other	(1,527		)	(1,376		)
Total deferred tax liabilities	(277,383		)	(318,238		)

Net deferred tax liability		($180,255	)		($238,230	)

Schedule of Effective Income Tax Rate Reconciliation

The table below provides reconciliation between the statutory federal income tax rate and the effective rate of income tax expense for each of the periods shown as follows. For periods with a loss before benefit for income taxes, favorable tax items result in an increase in the effective tax rate, while unfavorable tax items result in a decrease in the effective tax rate. For periods with income before provision for income taxes, favorable tax items result in an decrease in the effective tax rate, while, unfavorable tax items result in a increase in the effective tax rate.



	For the Year Ended	For the Year Ended	For the period
	December 31, 2014	December 31, 2013	September 29, 2012 to December 31, 2012	January 1, 2012 to September 28, 2012
	(Successor)	(Successor)	(Successor)	(Predecessor)
Federal statutory tax rate	35%	35%	35%	35%
State tax – net of federal benefit	1	1	1	2
Domestic manufacturing deduction	3	—	—	—
Tax contingencies	—	—	(1)	(6)
Non-deductible legal settlements	1	—	—	17
Non-deductible annual pharmaceutical manufacturers' fee	(1)	(2)	—	—
Non-deductible transaction costs	—	—	—	8
R&D Credit	2	2	—	—
Other	—	1	—	2
Effective tax rate	41%	37%	35%	58%

Schedule of Unrecognized Tax Benefits Roll Forward

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for the years ended December 31, 2014 (Successor) and December 31, 2013 (Successor), the successor period from September 29, 2012 through December 31, 2012, the predecessor period from January 1, 2012 through September 28, 2012 are as follows ($ amounts in thousands):



	For the Year Ended			For the Year Ended			For the period
	December 31, 2014			December 31, 2013			September 29, 2012 to December 31, 2012		January 1, 2012 to September 28, 2012
	(Successor)			(Successor)			(Successor)		(Predecessor)
Balance at the beginning of period		$17,981			$12,538			$12,119		$14,409
Additions based on tax positions related to the current year	2,786			2,577			419		2,337
Additions for tax positions of prior years	1,070			3,708			—		634
Reductions for tax positions of prior years	(6,484		)	(842		)	—		(5,261		)
Reductions due to lapse of applicable statute of limitations	—			—			—		—
Settlements paid	(858		)	—			—		—
Balance at the end of the period		$14,495			$17,981			$12,538		$12,119

PAR PHARMACEUTICAL COMPANIES, INC. 10-K