Amazon.com 2013 Annual Report Download - page 74

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Deferred income tax assets and liabilities are as follows (in millions):
December 31,
2013 2012
Deferred tax assets:
Net operating losses U.S. - Federal/States (1) $ 53 $ 47
Net operating losses foreign (2) 427 289
Accrued liabilities, reserves, & other expenses 590 482
Stock-based compensation 396 281
Deferred revenue 249 129
Assets held for investment 164 129
Other items 177 133
Tax credits (3) 107 12
Total gross deferred tax assets 2,163 1,502
Less valuation allowance (4) (698)(415)
Deferred tax assets, net of valuation allowance 1,465 1,087
Deferred tax liabilities:
Depreciation & amortization (1,021)(698)
Acquisition related intangible assets (201)(274)
Other items (16)(29)
Net deferred tax assets, net of valuation allowance $ 227 $ 86
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(1) Excluding $81 million and $9 million of deferred tax assets as of December 31, 2013 and 2012, related to net operating
losses that result from excess stock-based compensation and for which any benefit realized will be recorded to
stockholders’ equity.
(2) Excluding $2 million and $2 million of deferred tax assets as of December 31, 2013 and 2012, related to net operating
losses that result from excess stock-based compensation and for which any benefit realized will be recorded to
stockholders’ equity.
(3) Excluding $227 million and $146 million of deferred tax assets as of December 31, 2013 and 2012, related to tax
credits that result from excess stock-based compensation and for which any benefit realized will be recorded to
stockholders’ equity.
(4) Relates primarily to deferred tax assets that would only be realizable upon the generation of net income in certain
foreign taxing jurisdictions and future capital gains.
As of December 31, 2013, our federal, foreign, and state net operating loss carryforwards for income tax purposes were
approximately $275 million, $1.6 billion, and $880 million. The federal and state net operating loss carryforwards are subject to
limitations under Section 382 of the Internal Revenue Code and applicable state tax law. If not utilized, a portion of the federal,
foreign, and state net operating loss carryforwards will begin to expire in 2027, 2014, and 2014, respectively. As of
December 31, 2013, our tax credit carryforwards for income tax purposes were approximately $334 million. If not utilized, a
portion of the tax credit carryforwards will begin to expire in 2020.
The Company’s consolidated balance sheets reflect tax credit carryforwards excluding amounts resulting from excess
stock-based compensation. Accordingly, such credits from excess stock-based compensation are accounted for as an increase to
additional paid-in capital if and when realized through a reduction in income taxes payable.
Tax Contingencies
We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Significant judgment is required in
evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there are
many transactions and calculations for which the ultimate tax determination is uncertain. We establish reserves for tax-related
uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves are
established when we believe that certain positions might be challenged despite our belief that our tax return positions are fully
supportable. We adjust these reserves in light of changing facts and circumstances, such as the outcome of tax audits. The
provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate.