Microsoft 2010 Annual Report Download - page 60

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59
The components of the deferred income tax assets and liabilities were as follows:
(In millions)
June 30, 2010 2009
Deferred Income Tax Assets
Stock-based compensation expense $ 1,329 $ 2,004
Other expense items 1,696 1,595
Unearned revenue 556 743
Impaired investments 289 236
Other revenue items 80 120
Deferred income tax assets $ 3,950 $ 4,698
Deferred Income Tax Liabilities
International earnings $ (1,056)$ (1,191)
Unrealized gain on investments (674) (516)
Other (265) (499)
Deferred income tax liabilities (1,995) (2,206)
Net deferred income tax assets $ 1,955 $ 2,492
Reported As
Current deferred income tax assets $ 2,184 $ 2,213
Long-term deferred income tax assets (liabilities) (229) 279
Net deferred income tax assets $ 1,955 $ 2,492
Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets
and liabilities and their tax bases and are stated at enacted tax rates expected to be in effect when the taxes are
actually paid or recovered.
We have not provided deferred U.S. income taxes or foreign withholding taxes on temporary differences of
approximately $29.5 billion resulting from earnings for certain non-U.S. subsidiaries which are permanently
reinvested outside the U.S. The unrecognized deferred tax liability associated with these temporary differences is
approximately $9.2 billion.
Income taxes paid were $4.1 billion, $6.6 billion, and $5.4 billion in fiscal years 2010, 2009, and 2008, respectively.
Uncertain Tax Positions
As of June 30, 2010, we had $6.5 billion of unrecognized tax benefits of which $5.6 billion, if recognized, would affect
our effective tax rate. As of June 30, 2009, we had $5.4 billion of unrecognized tax benefits of which $4.4 billion, if
recognized, would affect our effective tax rate.
Interest on unrecognized tax benefits was $193 million, $230 million, and $121 million in fiscal years 2010, 2009 and
2008, respectively. As of June 30, 2010, 2009 and 2008, we had accrued interest related to uncertain tax positions of
$747 million, $554 million, and $324 million, respectively, net of federal income tax benefits.