Google 2009 Annual Report Download - page 110

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Google Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 13. 401(k) Plan
We have a 401(k) Savings Plan (401(k) Plan) that qualifies as a deferred salary arrangement under
Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, participating employees may elect to
contribute up to 60% of their eligible compensation, subject to certain limitations. Employee and our contributions
are fully vested when contributed. We contributed approximately $51.1 million, $72.6 million, and $82.5 million
during 2007, 2008, and 2009.
Note 14. Income Taxes
Income before income taxes included income from foreign operations of $2,466.9 million, $3,793.7 million,
and $4,802.1 million for 2007, 2008, and 2009.
The provision for income taxes consists of the following (in thousands):
Year Ended December 31,
2007 2008 2009
Current:
Federal .................................................... $1,288,310 $ 1,348,210 $ 1,531,016
State ...................................................... 294,935 467,572 449,828
Foreign .................................................... 51,227 90,930 147,956
Total .................................................. 1,634,472 1,906,712 2,128,800
Deferred:
Federal .................................................... (135,047) (197,593) (273,552)
State ...................................................... (29,165) (62,538) 13,111
Foreign .................................................... — (19,843) (7,618)
Total .................................................. (164,212) (279,974) (268,059)
Provision for income taxes ........................................ $1,470,260 $1,626,738 $ 1,860,741
The reconciliation of federal statutory income tax rate to our effective income tax rate is as follows (in
thousands):
Year ended December 31,
2007 2008 2009
Expected provision at federal statutory tax rate (35%) .............. $1,985,893 $2,048,758 $ 2,933,416
State taxes, net of federal benefit ................................ 172,750 263,272 302,493
Stock-based compensation expense ............................. 123,869 90,805 62,574
Impairment of investments ...................................... — 312,603 (40,663)
Foreign rate differential ......................................... (705,400) (1,019,536) (1,340,962)
Federal research credit ......................................... (81,469) (51,841) (55,767)
Tax exempt interest ............................................ (50,662) (51,713) (14,836)
Other permanent differences .................................... 25,279 34,390 14,486
Provision for income taxes ...................................... $1,470,260 $ 1,626,738 $ 1,860,741
We have not provided U.S. income taxes and foreign withholding taxes on the undistributed earnings of
foreign subsidiaries as of December 31, 2009 because we intend to permanently reinvest such earnings outside
the U.S. If these foreign earnings were to be repatriated in the future, the related U.S. tax liability may be reduced by
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