eBay 2009 Annual Report Download - page 127

eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Deferred tax assets and liabilities are recognized for the future tax consequences of differences between the
carrying amounts of assets and liabilities and their respective tax bases using enacted tax rates in effect for the
year in which the differences are expected to reverse. Significant deferred tax assets and liabilities consist of the
following (in thousands):
December 31,
2008 2009
Deferred tax assets:
Net operating loss and credits ................. $311,807 $ 120,907
Accruals and allowances .................... 242,763 387,140
Stock-based compensation ................... 212,147 211,260
Net unrealized losses ....................... 4,052 5,077
Net deferred tax assets ...................... 770,769 724,384
Valuation allowance ........................ (167,767) (68,746)
603,002 655,638
Deferred tax liabilities:
Acquisition-related intangibles ................ (165,793) (151,563)
Depreciation and amortization ................ (73,477) (80,956)
Available-for-sale securities .................. (48,812) (161,536)
Foreign statutory reserves .................... (19,498) (17,613)
(307,580) (411,668)
$ 295,422 $ 243,970
As of December 31, 2009 our federal, foreign and state net operating loss carryforwards, or NOLs, for
income tax purposes were approximately $143.6 million, $159.5 million, and $182.3 million, respectively. The
federal and state net operating loss carryforwards are subject to various limitations under Section 382 of the
Internal Revenue Code. 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 2011. As of December 31, 2009, our state
tax credit carryforwards for income tax purposes were approximately $20.3 million. If not utilized, the state tax
credit carryforwards will begin to expire in 2015. As of December 31, 2009, our federal capital loss carryover
resulting primarily from the sale of StumbleUpon and Sonorit amounted to $72.8 million, which is subject to full
valuation allowance. If not utilized, the federal capital loss carryover will begin to expire in 2014.
At December 31, 2009 and 2008, we maintained a valuation allowance with respect to certain of our
deferred tax assets relating primarily to operating losses in certain non-U.S. jurisdictions that we believe are not
likely to be realized. Included in the December 2008 valuation allowance amount were $137.6 million of
deferred tax assets primarily related to the net operating losses of Skype, which we sold in November 2009.
We have not provided for U.S. federal income and foreign withholding taxes on $7.9 billion of non-U.S.
subsidiaries’ undistributed earnings as of December 31, 2009, because such earnings are intended to be
indefinitely reinvested in the operations and potential acquisitions related to 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.
The Company enjoys “tax holidays” in several different jurisdictions, most significantly Singapore and
Switzerland. The tax holidays provide for lower rates of taxation on certain classes of income and require various
thresholds of investment and employment in those jurisdictions. These tax holidays are in effect currently and
expire over periods ranging from 2016 to the duration of business operations in the respective jurisdictions.
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