Microsoft 2013 Annual Report Download - page 68

The components of the deferred income tax assets and liabilities were as follows:
(In millions)
June 30,
2013
2012
Deferred Income Tax Assets
Stock-based compensation expense
$ 888
$ 882
Other expense items
917
965
Unearned revenue
445
571
Impaired investments 246
152
Loss carryforwards
715
532
Other revenue items
55
79
Deferred income tax assets
$ 3,266
$ 3,181
Less valuation allowance
(579)
(453)
Deferred income tax assets, net of valuation allowance
$ 2,687
$ 2,728
Deferred Income Tax Liabilities
International earnings
$ (1,146)
$ (1,072)
Unrealized gain on investments
(1,012)
(830)
Depreciation and amortization
(604)
(670)
Other
(2)
(14)
Deferred income tax liabilities
$ (2,764)
$ (2,586)
Net deferred income tax assets (liabilities)
$ (77)
$ 142
Reported As
Current deferred income tax assets
$ 1,632
$ 2,035
Long-term deferred income tax liabilities
(1,709)
(1,893)
Net deferred income tax assets (liabilities) $ (77)
$ 142
As of June 30, 2013, we had net operating loss carryforwards of $2.7 billion, including $2.2 billion of foreign net operating
loss carryforwards acquired through our acquisition of Skype. The valuation allowance disclosed in the table above relates
to the foreign net operating loss carryforwards that may not be realized.
Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and
liabilities and their tax bases and are stated at enacted tax rates expected to be in effect when the taxes are actually paid
or recovered.
As of June 30, 2013, we have not provided deferred U.S. income taxes or foreign withholding taxes on temporary
differences of approximately $76.4 billion resulting from earnings for certain non-U.S. subsidiaries which are permanently
reinvested outside the U.S. The unrecognized deferred tax liability associated with these temporary differences was
approximately $24.4 billion at June 30, 2013.
Income taxes paid were $3.9 billion, $3.5 billion, and $5.3 billion in fiscal years 2013, 2012, and 2011, respectively.
Uncertain Tax Positions
As of June 30, 2013, we had $8.6 billion of unrecognized tax benefits of which $6.5 billion, if recognized, would affect our
effective tax rate. As of June 30, 2012, we had $7.2 billion of unrecognized tax benefits of which $6.2 billion, if recognized,
would have affected our effective tax rate.
Interest on unrecognized tax benefits was $400 million, $154 million, and $38 million in fiscal years 2013, 2012, and 2011,
respectively. As of June 30, 2013, 2012, and 2011, we had accrued interest related to uncertain tax positions of $1.3
billion, $939 million, and $785 million, respectively, net of federal income tax benefits.