Qurate Retail, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes Income Tax (Tables)

Income Taxes Income Tax (Tables)

12 Months Ended

Dec. 31, 2014

Schedule of components of income tax expense (benefit)

Income tax expense (benefit) consisted of the following:



	Years ended December 31,
(in millions)	2014			2013		2012
Current:
U.S. federal	$	396		361		369
State and local	28			22		23
Foreign jurisdiction	132			78		136
Total	556			461		528
Deferred:
U.S. federal	(182		)	(107	)	(121	)
State and local	(15		)	(7	)	(7	)
Foreign jurisdiction	(5		)	6		(6	)
Total	(202		)	(108	)	(134	)
Total income tax expense	$	354		353		394

Schedule of pre-tax income, domestic and foreign

Pre-tax income was as follows:



	Years ended December 31,
(in millions)	2014			2013		2012
QVC-U.S.	$	827		824		865
QVC-Germany	16			18		29
QVC-Japan	146			181		253
QVC-U.K.	19			1		(17	)
QVC-Italy	(15		)	(38	)	(49	)
QVC-France	(6		)	—		—
Consolidated QVC	$	987		986		1,081

Schedule of effective income tax rate reconciliation

Total income tax expense differs from the amounts computed by applying the U.S. federal income tax rate of 35% as a result of the following:



	Years ended December 31,
	2014		2013		2012
Provision at statutory rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	0.9	%	0.7	%	1.0	%
Foreign taxes	0.6	%	0.6	%	1.3	%
Foreign earnings repatriation	(0.3	)%	(0.4	)%	(1.1	)%
Valuation allowance	0.2	%	—	%	—	%
Permanent differences	(0.5	)%	—	%	0.1	%
Other, net	—	%	(0.1	)%	0.1	%
Total income tax expense	35.9	%	35.8	%	36.4	%

Schedule of deferred tax assets and liabilities

The tax effects of temporary differences that gave rise to significant portions of the deferred income tax assets and deferred income tax liabilities are presented below:



	December 31,
(in millions)	2014			2013
Deferred tax assets:
Accounts receivable, principally due to the allowance for doubtful accounts and related reserves for the uncollectible accounts	$	33		32
Inventories, principally due to obsolescence reserves and additional costs of inventories for tax purposes pursuant to the Tax Reform Act of 1986	33			36
Allowance for sales returns	41			39
Deferred compensation	43			36
Unrecognized federal and state tax benefits	63			29
Accrued liabilities	82			25
Other	27			36
Subtotal	322			233
Valuation allowance	(3		)	(1	)
Total deferred tax assets	319			232
Deferred tax liabilities:
Depreciation and amortization	(1,222		)	(1,349	)
Cumulative translation of foreign currencies	(8		)	(47	)
Total deferred tax liabilities	(1,230		)	(1,396	)
Net deferred tax liability	$	(911	)	(1,164	)

Schedule of unrecognized tax benefits roll forward

A reconciliation of the 2014 beginning and ending amount of the liability for unrecognized tax benefits is as follows:



(in millions)
Balance at January 1, 2014	89
Increases related to prior year tax positions	27
Decreases related to prior year tax positions	(10	)
Increases related to current year tax positions	17
Balance at December 31, 2014	123