Yahoo 2014 Annual Report Download - page 148

Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for income tax
purposes. The components of deferred income tax assets and liabilities are as follows (in thousands):
December 31,
2013 2014
Deferred income tax assets:
Net operating loss and tax credit carryforwards $ 148,060 $ 156,385
Stock-based compensation expense 66,583 55,951
Non-deductible accrued expenses 52,902 118,457
Deferred revenue 164,264 90,023
Fixed assets 22,937 18,059
Federal benefits relating to tax positions 214,208 320,185
Other 10,642 8,104
Gross deferred income tax assets 679,596 767,164
Valuation allowance (36,690) (23,853)
Deferred income tax assets $ 642,906 $ 743,311
Deferred income tax liabilities:
Purchased intangible assets $(156,435) $ (200,569)
Fixed assets (86,641) (174,196)
Alibaba unrealized gains — (16,154,906)
Basis difference in investments (323,368) (75,368)
Restructuring liabilities (7,235) (8,224)
Other — (3,271)
Deferred income tax liabilities $(573,679) $(16,616,534)
Net deferred income tax assets (liabilities) $ 69,227 $(15,873,223)
As of December 31, 2014, the Company’s federal and state net operating loss carryforwards for
income tax purposes were approximately $303 million and $207 million, respectively. The federal and
state net operating loss carryforwards are subject to various limitations under Section 382 of the
Internal Revenue Code and applicable state tax law. If not utilized, the federal and state net operating
loss carryforwards will begin to expire in 2021.
The Company accrued deferred tax liabilities of $16.2 billion associated with the Alibaba Group shares
that it retained. Such deferred tax liabilities are subject to periodic adjustments due to changes in the
fair value of the Alibaba Group shares. The Company estimates that it will pay taxes of approximately
$3.3 billion in the three months ended March 31, 2015 related to YHK’s sale of Alibaba Group ADSs in
the IPO on September 24, 2014.
On December 19, 2014, the Tax Increase Prevention Act of 2014 was signed into law, extending 2014
federal research and development credit. As such, the provision for income taxes for the year ended
December 31, 2014 reflects the benefit of the 2014 federal research and development tax credit. The
Company’s state research tax credit carryforward for income tax purposes is approximately $135
million and it can be carried forward indefinitely. Tax credit carryforwards that result from the
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