eBay 2011 Annual Report Download - page 133

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 be reversed.
Significant deferred tax assets and liabilities consist of the following (in thousands):
As of December 31, 2011 , our federal, foreign and state net operating loss carryforwards for income tax purposes were approximately
$172.9 million , $186.3 million and $480.3 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 net operating loss
carryforwards will begin to expire in 2021 and the state net operating loss carryforwards will begin to expire in 2013. As of December 31, 2011 ,
our state tax credit carryforwards for income tax purposes were approximately $10.2 million
. If not utilized, the state tax credit carryforwards will
begin to expire in 2015. As of December 31, 2011 and 2010, our federal capital loss carryover amounted to $150.7 million and $65.4 million ,
respectively, which is subject to a full valuation allowance. The increase in the capital loss carryover and associated valuation allowance is
primarily due to our divestiture of a business. If not utilized, the federal capital loss carryover will begin to expire in 2014.
At December 31, 2011 and 2010
, 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.
We have not provided for U.S. federal income and foreign withholding taxes on $10.0 billion of our non-U.S. subsidiaries' undistributed
earnings as of December 31, 2011 . We intend to indefinitely reinvest the $10.0 billion of our non-U.S. subsidiaries’ undistributed earnings in our
international operations. Accordingly, we currently have no plans to repatriate those funds. As such, we do not know the time or manner in which
we would repatriate those funds. Because the time or manner of repatriation is uncertain, we cannot determine the impact of local taxes,
withholding taxes and foreign tax credits associated with the future repatriation of such earnings and therefore cannot quantify the tax liability. In
cases where we intend to repatriate a portion of our foreign subsidiaries’ undistributed earnings, we provide U.S. taxes on such earnings and such
taxes are included in our deferred taxes or tax payable liabilities depending upon the planned timing and manner of such repatriation.
On a regular basis, we develop cash forecasts to estimate our cash needs internationally and domestically. We consider projected cash needs
for, among other things, investments in our existing businesses, potential acquisitions and capital transactions, including repurchases of our
common stock and debt repayments. We estimate the amount of cash available or needed in the jurisdictions where these investments are
expected, as well as our ability to generate cash in those jurisdictions and our access to capital markets. Such an analysis enables us to conclude
whether or not we will indefinitely reinvest the current period’s foreign earnings. We benefit from tax rulings concluded in several different
jurisdictions, most significantly Singapore and Switzerland. These rulings provide for lower rates of taxation on certain classes of income and
require various thresholds of investment and employment in those jurisdictions. These rulings resulted in a tax savings of $696.5 million and
$284.0 million in 2011 and 2010 , respectively, increasing earnings per share (diluted) by approximately $0.53 and $0.21 in 2011 and 2010 ,
respectively. These tax rulings are in effect currently and expire over periods ranging from 2016 to the duration
F-39
December 31,
2011
2010
Deferred tax assets:
Net operating loss and credits
$
186,759
$
90,390
Accruals and allowances
340,074
310,075
Stock-based compensation
114,283
117,021
Discount on note receivable
67,715
—
Net unrealized losses
1,621
1,882
Net deferred tax assets
710,452
519,368
Valuation allowance
(83,059
)
(42,740
)
627,393
476,628
Deferred tax liabilities:
Unremitted foreign earnings
(198,363
)
(230,646
)
Acquisition-related intangibles
(461,482
)
(102,894
)
Depreciation and amortization
(264,319
)
(165,563
)
Available-for-sale securities
(234,156
)
(199,421
)
Other
(21,320
) —
(1,179,640
)
(698,524
)
$
(552,247
)
$
(221,896
)