Classmates.com 2010 Annual Report Download - page 142

Table of Contents
UNITED ONLINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. INCOME TAXES (Continued)
At December 31, 2010 and 2009, the Company had gross unrecognized tax benefits of $8.5 million and $9.7 million, respectively, all of
which, if recognized, would have an impact on the Company's effective income tax rate. The changes in gross unrecognized tax benefits for the
years ended December 31, 2010, 2009 and 2008 were as follows, excluding interest and penalties (in thousands):
During the year ending December 31, 2011, $3.1 million of gross unrecognized tax benefits will lapse due to the statute of limitations
expiring and the Company does not anticipate a material increase in gross unrecognized tax benefits during this period. However, the Company
is currently under audit by certain taxing jurisdictions in the U.S. Some audits may conclude in the next twelve months and any unrecognized tax
benefits we have recorded in relation to the audits may differ from actual settlement amounts. It is not possible to estimate the effect, if any, of
any such settlements. The Company files income tax returns in the U.S., various state and local jurisdictions, the U.K., and in certain other
foreign jurisdictions. With few exceptions, the Company is not subject to federal, foreign, state or local examination for years prior to fiscal
2006.
The Company had $3.2 million and $3.0 million accrued for interest and penalties relating to uncertain tax positions at December 31, 2010
and 2009, respectively, all of which is included in income taxes payable. The Company recognized net interest and penalties totaling
$0.1 million, $(0.7) million and $2.5 million for the years ended December 31, 2010, 2009 and 2008, respectively.
At December 31, 2010, U.S. income taxes have not been provided on $4.3 million of undistributable earnings of the Company's India
subsidiary because such earnings have been permanently reinvested in foreign operations. The determination of taxes associated with the
undistributed earnings is not practicable.
For the years ended December 31, 2010, 2009 and 2008, income tax shortfalls, net, attributable to equity-based compensation that were
allocated to stockholders' equity amounted to $1.0 million, $3.0 million and $0.5 million, respectively.
At December 31, 2010, the Company had federal, state and foreign net operating loss carryforwards of $125.0 million, $42.4 million and
$7.3 million, respectively. The federal and state net operating loss carryforwards will begin and have begun to expire in 2018 and 2009,
respectively, and the
F-36
Balance at January 1, 2008
$
10,301
Additions due to FTD acquisition
1,508
Additions related to current year positions
72
Reductions due to lapse of statute of limitations
(1,142
)
Additions related to prior year positions
1,068
Balance at December 31, 2008
11,807
Lapse of statute of limitations
(3,354
)
Additions related to prior year positions
1,276
Balance at December 31, 2009
9,729
Lapse of statute of limitations
(2,417
)
Additions related to current year positions
743
Additions related to prior year positions
475
Balance at December 31, 2010
$
8,530