INTL FCStone 2005 Annual Report Download - page 70

INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements—(Continued)
September 30, 2005 and 2004
Deferred income taxes as of September 30, 2005 and 2004 reflect the impact of “temporary differences”
between amounts of assets and liabilities for financial statement purposes and such amounts as measured by tax
laws. The temporary differences give rise to deferred tax assets and liabilities, which are summarized below as of
September 30, 2005 and 2004:
2005 2004
as restated
Gross deferred tax liabilities:
Accumulated depreciation and amortization ....................... $(46,161) $ (41,879)
Deferred expenses related to total return swap ..................... (20,571)
Total gross deferred tax liabilities ........................... (66,732) (41,879)
Gross deferred tax assets:
Securities valuation allowance ................................. 23,383 34,050
Investment in limited partnership ............................... 953
Nonqualified stock option expense .............................. 19,326
Deferred revenue for total return swap ........................... 68,571
Expense of warrant value ..................................... 15,264 15,264
Rent amortization ........................................... 28,332 15,145
Compensation bonus accrual ................................... 256,357
State net operating loss carryforward ............................ 13,467 26,042
Alternative minimum tax credit carryforwards ..................... 37,580
Total gross deferred tax asset .............................. 149,017 404,717
Valuation allowance
Total net deferred tax assets ............................... 149,017 404,717
Net deferred tax asset .................................... $ 82,285 $362,838
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not
that a portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income or the reversal of deferred tax liabilities during the
periods in which those temporary differences become deductible. Management considers the scheduled reversal
of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
As of September 30, 2005, based upon the projections for future taxable income, management believes it is more
likely than not that the Company will realize the benefits of these deductible differences and net operating loss
carryforward, net of the recorded valuation allowance.
The total amount of undistributed earnings of INTL Global Currencies the Company’s foreign subsidiary,
for income tax purposes, was approximately $1,944,000 at September 30, 2005. It is the Company’s intention to
reinvest undistributed earnings of its foreign subsidiary in the foreign jurisdiction, resulting in the indefinite
postponement of the remittance of those earnings. Accordingly, no provision has been made for foreign
withholding taxes or United States income taxes which may become payable if undistributed earnings of the
foreign subsidiary were paid as dividends to the Company. For the same reason, it is not practicable to calculate
the unrecognized deferred tax liability on those earnings.
At September 30, 2005, the Company had net operating loss carryforwards for state of Florida income tax
purposes which begin to expire in the fiscal year ending 2021.
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