eBay 2007 Annual Report Download - page 120

in which the differences are expected to reverse. Significant deferred tax assets and liabilities consist of the
following (in thousands):
2006 2007
December 31,
Deferred tax assets:
Net operating loss and credits ................................ $111,133 $ 159,333
Accruals and allowances . ................................... 88,887 162,166
Stock-based compensation ................................... 103,389 158,767
Net unrealized (gains) losses ................................. 4,024 4,145
Net deferred tax assets . . ................................... 307,433 484,411
Valuation allowance ....................................... (69,777) (119,153)
237,656 365,258
Deferred tax liabilities:
Acquisition-related intangibles ................................ (171,422) (152,068)
Depreciation and amortization ................................ (30,139) (36,462)
Available-for-sale securities .................................. — (235,894)
(201,561) (424,424)
$ 36,095 $ (59,166)
As of December 31, 2007, our federal, foreign and state net operating loss carryforwards, or NOLs, for income
tax purposes were approximately $44.8 million, $543.4 million, and $49.5 million, respectively. The utilization of a
portion of the NOLs is subject to an annual limitation under Section 382 of the Internal Revenue Code due to a
change of ownership. However, we do not believe such annual limitation will impact our realization of the NOLs. If
not utilized, the federal net operating loss carryforwards will begin to expire in 2019, the state net operating loss
carryforwards will begin to expire in 2009, and the foreign net operating loss carryforwards will begin to expire in
2009. As of December 31, 2007, our state tax credit carryforwards for income tax purposes were approximately
$7.9 million. If not utilized, the state tax credit carryforwards will begin to expire in 2015.
We have not provided for U.S. federal income and foreign withholding taxes on $3.8 billion of non-U.S. sub-
sidiaries’ undistributed earnings as of December 31, 2007, because such earnings are intended to be indefinitely
reinvested in the operations and potential acquisitions of our International operations. Upon distribution of those
earnings in the form of dividends or otherwise, we would be subject to U.S. income taxes (subject to an adjustment
for foreign tax credits). It is not practicable to determine the income tax liability that might be incurred if these
earnings were to be distributed.
On January 1, 2007, we adopted the provisions of FIN 48. The adoption of FIN 48 resulted in a $145,000
adjustment to beginning retained earnings.
The following table reflects changes in the unrecognized tax benefits since January 1, 2007:
(in thousands)
Gross amounts of unrecognized tax benefits as of January 1, 2007 ................ $385,700
Gross amounts over increases in unrecognized tax benefits for tax positions taken
during 2007 ...................................................... 108,553
Gross amounts of unrecognized tax benefits as of December 31, 2007 ............. $494,253
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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)