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Income Taxes Our provision for income taxes for our continuing operations over the last three years were: • $8 million in 2007; • $480 million in 2006; and • $530 million in 2005. Tax Benefits, Charges and Credits During 2007, we recognized these one-time tax benefits and charges: • $22 million deferred tax benefit related to a reduction in the Canadian federal income tax rate; and • $9 million charge to deferred taxes related to the Flat Rate Business Tax Reform in Mexico. During 2006, we recognized these one-time tax benefits: • $12 million related to a change in Texas state income tax law; • $18 million related to reduction in the Canadian federal income tax rate; and • $18 million related to a deferred tax adjustment associated with the Medicare Part D subsidy. During 2005, we recognized these one-time tax benefits: • $14 million related a change in Ohio state income tax law; and • $7 million related to a change in the British Columbia income tax law. During 2007, we recognized a tax benefit of $89 million from the sale of our Fine Paper business and related assets, resulting from a rollout of temporary differences on the assets sold in Canada. The gain was not taxable in the U.S. During 2006, we recognized tax expense on dispositions of $18 million related to the gain on sale of our North American composite panel operations and $4 million related to the gain on sale of our Irish composite panel operations. During the second quarter of 2005, we recognized a $46 million income tax benefit in connection with the sale of the company’s B.C. Coastal operations. See Note 3: Discontinued Operations of Notes to Consolidated Financial Statements. The income tax benefit recognized upon the sale of the B.C. Coastal operations included a deferred tax benefit of $185 million resulting from the rollout of temporary differences on the assets sold and a current tax expense of $139 million on the taxable gain. Current taxes reflect the benefit of favorable capital gains treatment applicable to the sale of timberlands in Canada. We also recognized a tax charge in 2005 of $44 million for the accrual of income taxes associated with the repatriation of approximately $1.1 billion of foreign earnings. See Note 22: Income taxes of Notes to Consolidated Financial Statements. |