Google 2015 Annual Report Download - page 97

Table of Contents Alphabet Inc. and Google Inc.
93
As of December 31,
2014 2015
Deferred tax assets:
Stock-based compensation expense $ 376 $ 534
State taxes 133 119
Investment loss 133 144
Legal settlement accruals 175 101
Accrued employee benefits 671 832
Accruals and reserves not currently deductible 175 245
Net operating losses 207 230
Tax credits 262 503
Basis difference in investment of Arris 1,347 1,357
Prepaid cost sharing 0 3,468
Other 243 337
Total deferred tax assets 3,722 7,870
Valuation allowance (1,659) (1,732)
Total deferred tax assets net of valuation allowance 2,063 6,138
Deferred tax liabilities:
Depreciation and amortization (852) (1,126)
Identified intangibles (965) (787)
Mark-to-market investments (273) (93)
Renewable energy investments (430) (529)
Foreign earnings 0 (3,468)
Other (125) (73)
Total deferred tax liabilities (2,645) (6,076)
Net deferred tax liabilities $ (582) $ 62
As of December 31, 2015, our federal and state net operating loss carryforwards for income tax purposes were
approximately $482 million and $443 million. If not utilized, the federal net operating loss carryforwards will begin to
expire in 2021 and the state net operating loss carryforwards will begin to expire in 2016. The net operating loss
carryforwards are subject to various annual limitations under the tax laws of the different jurisdictions. Our foreign net
operating loss carryforwards for income tax purposes were $263 million that can be carried over indefinitely.
As of December 31, 2015, our California research and development credit carryforwards for income tax purposes
were approximately $1,044 million that can be carried over indefinitely. We believe the state tax credit is not likely to
be realized. Our foreign tax credit carryforwards for income tax purposes were approximately $223 million that will
start to expire in 2025. We believe it is more likely than not that all of the foreign tax credit will be realized.
As of December 31, 2015, we maintained a valuation allowance with respect to certain of our deferred tax assets
relating primarily to investment losses that are capital in nature, California deferred tax assets, and certain foreign net
operating losses that we believe are not likely to be realized. We established a deferred tax asset for the book-to-tax
basis difference in our investments in Arris shares received from the sale of the Motorola Home business to Arris in
2013. Since any future losses to be recognized upon the sale of Arris shares will be capital losses, a valuation allowance
has been recorded against this deferred tax asset to the extent such deferred tax asset is not covered by capital gains
generated as of 2015. We reassess the valuation allowance quarterly and if future evidence allows for a partial or full
release of the valuation allowance, a tax benefit will be recorded accordingly.
As a result of the Altera opinion, we have recorded a deferred tax asset of $3.5 billion and a deferred tax liability
of $3.5 billion. Refer to above for more details on the Altera case.
Uncertain Tax Positions
The following table summarizes the activity related to our gross unrecognized tax benefits from January 1, 2013
to December 31, 2015 (in millions):