Yahoo 2015 Annual Report Download - page 153

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,
2014 2015
Deferred income tax assets:
Net operating loss and tax credit carryforwards $ 156,385 $ 185,425
Stock-based compensation expense 55,951 34,644
Non-deductible accrued expenses 118,457 114,519
Deferred revenue 90,023 10,153
Fixed assets 18,059 14,096
Federal benefits relating to tax positions 320,185 308,347
Other 8,104 8,580
Gross deferred income tax assets 767,164 675,764
Valuation allowance (23,853) (29,001)
Deferred income tax assets $ 743,311 $ 646,763
Deferred income tax liabilities:
Purchased intangible assets $ (200,569) $ (86,905)
Fixed assets (174,196) (146,234)
Alibaba unrealized gains (16,154,906) (12,611,867)
Unrealized income in investments (75,368) (85,761)
Restructuring liabilities (8,224) (4,046)
Other (3,271) (2,216)
Deferred income tax liabilities $(16,616,534) $(12,937,029)
Net deferred income tax liabilities $(15,873,223) $(12,290,266)
As of December 31, 2015, the Company’s federal and California net operating loss carryforwards for
income tax purposes were approximately $338 million and $152 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 California net
operating loss carryforwards will begin to expire in 2021.
In the three months ended March 31, 2015, the Company satisfied the $3.3 billion income tax liability
related to the sale by Yahoo! Hong Kong Holdings Limited, our wholly-owned subsidiary, of Alibaba
Group ADSs in the Alibaba Group IPO on September 24, 2014. As of December 31, 2015 the Company
accrued deferred tax liabilities of $12.6 billion associated with the 384 million ordinary shares of
Alibaba Group (“Alibaba Group shares”) retained by the Company. Such deferred tax liabilities are
subject to periodic adjustments due to changes in the fair value of the Alibaba Group shares.
On December 18, 2015, the Protecting Americans from Tax Act of 2015 was signed into law, extending
2015 federal research and development credit. As such, the provision for income taxes for the year
ended December 31, 2015 reflects the benefit of the 2015 federal research and development tax
credit. The Company’s state research tax credit carryforward for income tax purposes is
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