Harbinger Group Inc.
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SEC Filings

10-K
HRG GROUP, INC. filed this Form 10-K on 11/23/2016
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The following table summarizes the components of deferred income tax assets and liabilities:
 
 
September 30,
 
 
2016
 
2015
Deferred tax assets:
 
 
 
 
Net operating loss, credit and capital loss carryforwards
 
$
7.3

 
$
(9.4
)
Unrealized losses on mark-to-market securities
 
12.2

 
17.2

Insurance reserves and claim related adjustments
 
23.3

 
43.4

Outside basis differences on partnership interests
 
45.2

 
43.8

Insurance receivables
 
—

 
21.2

Investments
 
—

 
13.1

Other
 
18.8

 
57.7

Total deferred tax assets
 
106.8

 
187.0

Less: Valuation allowance
 
14.4

 
25.7

Net deferred tax assets
 
92.4

 
161.3

 
 
 
 
 
Deferred tax liabilities:
 
 
 
 
Outside basis difference on held for sale assets
 
(368.4
)
 
—

Investments
 
(39.3
)
 
(87.4
)
Insurance reserves and claim related adjustments
 
(5.0
)
 
(14.9
)
Other
 
(19.8
)
 
(11.5
)
Total deferred tax liabilities
 
(432.5
)
 
(113.8
)
Net deferred tax (liability) asset
 
$
(340.1
)
 
$
47.5

At September 30, 2016 and 2015, the Company had gross U.S. Federal operating loss carryforwards of $12.5 and $65.3, respectively, which, if unused, will expire in years 2028 through 2036.
In accordance with ASC Topic 740, the Company establishes valuation allowances for deferred tax assets that, in its judgment, are not more-likely-than-not realizable. These judgments are based on projections of future income, including tax-planning strategies, by individual tax jurisdiction. Changes in industry and economic conditions and the competitive environment may impact the accuracy of these projections. In accordance with ASC Topic 740, during each reporting period, the Company assesses the likelihood that its deferred tax assets will be realized and determines if adjustments to its valuation allowances are appropriate. As a result of this assessment, for Fiscal 2016, 2015 and 2014, the Company established a net (decrease)/increase in the valuation allowance to earnings totaling $(0.2), $36.5 and $2.1, respectively, as more fully described below.
FS Holdco Tax Group
The deferred tax assets for each of the reporting periods were evaluated including an assessment of future sources of taxable income to support realizability. At September 30, 2016, the Company reversed the portion of valuation allowance previously recorded on certain deferred tax assets that are expected to be realized to offset the deferred tax liability recognized as a result of classifying the Company’s ownership interest in FGL as held for sale. FS Holdco had a valuation allowance totaling $14.4 and $25.7, respectively, at September 30, 2016 and 2015.
Front Street Cayman
The deferred tax assets of Front Street Cayman were evaluated for each of the reporting periods, including an assessment of cumulative income over the prior three-year period. Beginning with the tax year ended December 31, 2012, Front Street Cayman made an election under the Internal Revenue Code (“IRC”) Section 953(d) to be treated as a U.S. domestic life insurance corporation for Federal income tax purposes. As of September 30, 2016, Front Street Cayman was in a three-year cumulative loss position for U.S. Federal tax purposes but expects income in future periods. In addition, Front Street Cayman is eligible to carry back net operating losses (“NOLs”) generated for U.S. tax purposes in the current year to cumulative taxable income of $63.6 (including $12.8 of taxable income reported on the Company’s first tax return filed for its tax year ended December 31, 2012, $43.1 of taxable income reported for the tax year ended December 31, 2013, and $7.7 of taxable income reported for the tax year ended December 31, 2014). Based on Front Street Cayman’s taxable income in prior carryback years there is significant positive evidence that supports the realizability of its deferred tax assets. Thus, there were no valuation allowances established against Front Street Cayman’s deferred tax assets at September 30, 2016 and 2015.

S-90
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