Google 2013 Annual Report Download - page 79


PART II
ITEM8.Notes to Consolidated Financial Statements
Aretroactiveextensionofthe2012federalresearchanddevelopmentcreditwassignedintolawonJanuary2,2013inaccordance
withTheAmericanTaxpayerActof2012.Thebenetof$189millionrelatedtothe2012federalresearchanddevelopmentcredit
isincludedintheyearendedDecember31,2013.
WehavenotprovidedU.S.incometaxesandforeignwithholdingtaxesontheundistributedearningsofforeignsubsidiariesas
ofDecember31,2013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anyforeignincometaxespreviouslypaidonthese
earnings.AsofDecember31,2013,thecumulativeamountofearningsuponwhichU.S.incometaxeshavenotbeenprovided
isapproximately$38.9billion.Determinationoftheamountofunrecognizeddeferredtaxliabilityrelatedtotheseearningsis
notpracticable.
Deferred Tax Assets
Deferredincometaxesreecttheneteectsoftemporarydierencesbetweenthecarryingamountsofassetsandliabilitiesfor
nancialreportingpurposesandtheamountsusedforincometaxpurposes.Signicantcomponentsofourdeferredtaxassets
andliabilitiesareasfollows(inmillions):
As of December31,
2012 2013
Deferredtaxassets:
Stock-basedcompensationexpense $ 311 $ 283
Statetaxes 184 204
Capitallosscarryforward 236 215
SettlementwiththeAuthorsGuildandAAP 28 45
Vacationaccruals 67 94
Deferredrent 50 59
Accruedemployeebenets 323 383
Accrualsandreservesnotcurrentlydeductible 365 390
Unrealizedgain/lossoninvestmentsandothers 0 57
Netoperatinglosses 505 279
Taxcredit 274 394
BasisdierenceininvestmentofArris 2,043 1,372
Inventorywritedown 063
Other 128 128
Totaldeferredtaxassets 4,514 3,966
Valuationallowance (2,629)(1,899)
Totaldeferredtaxassetsnetofvaluationallowance 1,885 2,067
Deferredtaxliabilities:
Depreciationandamortization (761) (537)
Identiedintangibles (1,496) (1,479)
Unrealized gains on investments and other (105) 0
Otherprepaids (118) (125)
Other (133) (283)
Totaldeferredtaxliabilities (2,613) (2,424)
Netdeferredtaxliabilities $(728) $ (357)
AsofDecember31,2013,ourfederal,stateandforeignnetoperatinglosscarryforwardsforincometaxpurposeswereapproximately
$440million,$1,247millionand$824million.Ifnotutilized,thefederalnetoperatinglosscarryforwardswillbegintoexpirein
2019andthestatenetoperatinglosscarryforwardswillbegintoexpirein2014.Theforeignnetoperatinglosscanbecarried
forwardindenitely,howeveritismorelikelythannotthatitwillnotberealized,thereforewehaverecordedavaluationallowance
againstallmaterialforeignnetoperationlosses.Thenetoperatinglosscarryforwardsaresubjecttovariousannuallimitations
underthetaxlawsofthedierentjurisdictions.
AsofDecember31,2013,ourCaliforniaresearchanddevelopmentcreditcarryforwardsforincometaxpurposeswereapproximately
$450millionthatcanbecarriedoverindenitely.Webelieveitismorelikelythannotthataportionofthestatetaxcreditwill
notberealized.Therefore,wehaverecordedafullvaluationallowanceonthestatetaxcreditcarryforward.Wewillreassessthe
valuationallowancequarterlyandiffutureevidenceallowsforapartialorfullreleaseofthevaluationallowance,ataxbenet
willberecordedaccordingly.
AsofDecember31,2013,ourforeigntaxcreditcarryforwardsforincometaxpurposeswereapproximately$228millionthat
willstarttoexpirein2023.Webelieveitismorelikelythannotthatalloftheforeigntaxcreditwillberealized.Wewillreassess
theneedforavaluationallowanceonaquarterlybasisandiffutureevidencesupportsaneedtoestablishavaluationallowance,
thenataxexpensewillberecordedaccordingly.
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