Two Harbors Investment Corp. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

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

The following table summarizes the tax (benefit) provision recorded at the taxable subsidiary level for the years ended December 31, 2014, 2013 and 2012:



	Year Ended December 31,
(in thousands)	2014			2013		2012
Current tax provision (benefit):
Federal	$	6,507		$	808	$	(4,586	)
State	16			5		3
Total current tax provision (benefit)	6,523			813		(4,583		)
Deferred tax (benefit) provision	(80,261		)	83,598		(37,636		)
Total (benefit from) provision for income taxes	$	(73,738	)	$	84,411	$	(42,219	)

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

The following is a reconciliation of the statutory federal and state rates to the effective rates, for the years ended December 31, 2014, 2013 and 2012:



	Year Ended December 31,
	2014					2013					2012
(dollars in thousands)	Amount			Percent		Amount			Percent		Amount			Percent
Computed income tax expense at federal rate	$	32,691		35	%	$	225,573		34	%	$	84,894		34	%
State taxes, net of federal benefit, if applicable	10			—	%	4			—	%	2			—	%
Permanent differences in taxable income from GAAP net income	1,636			2	%	17,681			3	%	118			—	%
Dividends paid deduction	(108,075		)	(116	)%	(158,847		)	(24	)%	(127,233		)	(51	)%
(Benefit from) provision for income taxes/Effective Tax Rate⁽¹⁾	$	(73,738	)	(79	)%	$	84,411		13	%	$	(42,219	)	(17	)%

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(1)	The (benefit from) provision for income taxes is recorded at the taxable subsidiary level.

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

The Company’s consolidated balance sheet, as of December 31, 2014 and December 31, 2013, contains the following current and deferred tax liabilities and assets, which are included in other liabilities and other assets, respectively, and are recorded at the taxable subsidiary level:



(in thousands)	December 31, 2014				December 31, 2013
Income taxes (payable) receivable
Federal income taxes (payable) receivable	$	(1,375	)		$	(757	)
State and local income taxes (payable) receivable	—				—
Income taxes (payable) receivable, net	(1,375		)		(757		)
Deferred tax assets (liabilities)
Deferred tax asset	60,575			⁽¹⁾	14,927
Deferred tax liability	(19,728		)		(54,341		)
Total net deferred tax assets (liabilities)	40,847				(39,414		)
Total tax assets and liabilities, net	$	39,472			$	(40,171	)

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(1)	Net of valuation allowance of $0.1 million.

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

Components of the Company’s deferred tax assets and liabilities as of December 31, 2014 and December 31, 2013 are as follows:



(in thousands)	December 31, 2014			December 31, 2013
Derivative assets and liabilities	$	5,978		$	(45,740	)
Trading securities	(478		)	(1,380		)
Mortgage servicing rights	4,494			(846		)
Other assets	16			—
Other liabilities	859			—
Capitalized start-up and organizational costs	277			515
Alternative minimum tax credit	98			—
Net operating loss carryforward	9,448			7,986
Capital loss carryforward	20,155			51
Total net deferred tax assets (liabilities)	$	40,847		$	(39,414	)