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, 2018

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

Income tax expense (benefit) consisted of the following:



	Years ended December 31,
(in millions)	2018			2017		2016
Current:
U.S. federal	$	239		352		326
State and local	37			27		29
Foreign jurisdictions	84			87		73
Total	360			466		428
Deferred:
U.S. federal	(27		)	(320	)	(31	)
State and local	(2		)	(7	)	(8	)
Foreign jurisdictions	3			—		(4	)
Total	(26		)	(327	)	(43	)
Total income tax expense	$	334		139		385

Schedule of Income before Income Tax, Domestic and Foreign [Table Text Block]

Pre-tax income (loss) was as follows:



	Years ended December 31,
(in millions)	2018		2017		2016
QVC-U.S.	$	1,033	915		859
QVC-International	200		209		168
HSN	29		(38	)	—
Consolidated QVC	$	1,262	1,086		1,027

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

Total income tax expense differs from the amounts computed by applying the U.S. federal income tax rate of 21% in 2018 and 35% in 2017 and 2016, as a result of the following:



	Years ended December 31,
	2018		2017		2016
Provision at statutory rate	21.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	2.2	%	1.0	%	1.3	%
Foreign taxes	0.8	%	—	%	(0.3	)%
Foreign earnings repatriation	—	%	—	%	0.2	%
Valuation allowance	2.6	%	1.0	%	1.0	%
Permanent differences	(0.2	)%	(2.2	)%	(0.6	)%
Impact of Tax Cuts and Jobs Act	—	%	(26.0	)%	—	%
Investment in subsidiary	0.6	%	4.0	%	—	%
Impact of foreign currency tax regulation	(0.6	)%	0.4	%	1	%
Other, net	0.1	%	(0.4	)%	(0.1	)%
Total income tax expense	26.5	%	12.8	%	37.5	%

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

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)	2018			2017
Deferred tax assets:
Accounts receivable, principally due to the allowance for doubtful accounts and related reserves for the uncollectible accounts	$	29		28
Inventories, principally due to obsolescence reserves and additional costs of inventories for tax purposes pursuant to the Tax Reform Act of 1986	33			30
Allowance for sales returns	31			30
Deferred revenue	15			29
Deferred compensation	39			33
Unrecognized federal and state tax benefits	10			11
Net operating loss carryforwards	49			34
Foreign tax credits carryforward	17			—
Accrued liabilities	33			30
Other	5			1
Subtotal	261			226
Valuation allowance	(64		)	(33	)
Total deferred tax assets	197			193
Deferred tax liabilities:
Depreciation and amortization	(840		)	(876	)
Cumulative translation of foreign currencies	(16		)	(18	)
Investment in subsidiary	(41		)	(29	)
Total deferred tax liabilities	(897		)	(923	)
Net deferred tax liability	$	(700	)	(730	)

Summary of Positions for which Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Table Text Block]

A reconciliation of the 2017 and 2018 beginning and ending amount of the liability for unrecognized tax benefits is as follows:



(in millions)
Balance at January 1, 2017	$	55
Increases related to prior year tax positions	1
Decreases related to prior year tax positions	(8		)
Decreases related to settlements with taxing authorities	(4		)
Increases related to current year tax positions	6
Impact of transfer of HSN through common control transaction with Qurate Retail	3
Balance at December 31, 2017	53
Increases related to prior year tax positions	1
Decreases related to prior year tax positions	(9		)
Decreases related to settlements with taxing authorities	—
Increases related to current year tax positions	9
Balance at December 31, 2018	$	54