Microsoft 2015 Annual Report Download - page 69

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The components of the deferred income tax assets and liabilities were as follows:
(In millions)
June 30, 2015 2014
Deferred Income Tax Assets
Stock-based compensation expense $ 884 $903
Other expense items 1,531 1,112
Restructuring charges 211 0
Unearned revenue 520 520
Impaired investments 257 272
Loss carryforwards 1,158 922
Depreciation and amortization 798 0
Other revenue items 56 64
Deferred income tax assets 5,415 3,793
Less valuation allowance (2,265) (903)
Deferred income tax assets, net of valuation allowance $ 3,150 $ 2,890
Deferred Income Tax Liabilities
Foreign earnings $ (1,280)$(1,140)
Unrealized gain on investments and debt (2,223) (1,974)
Depreciation and amortization (685) (470)
Other (29) (87)
Deferred income tax liabilities (4,217) (3,671)
Net deferred income tax assets (liabilities) $ (1,067)$(781)
Reported As
Current deferred income tax assets $ 1,915 $1,941
Other current liabilities (211) (125)
Other long-term assets 64 131
Long-term deferred income tax liabilities (2,835) (2,728)
Net deferred income tax assets (liabilities) $ (1,067)$(781)
As of June 30, 2015, we had net operating loss carryforwards of $4.6 billion, including $1.8 billion of foreign net
operating loss carryforwards acquired through our acquisition of Skype, and $545 million through our acquisition of
NDS. The valuation allowance disclosed in the table above relates to the foreign net operating loss carryforwards
and other future deductible net deferred tax assets that may not be realized.
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.
As of June 30, 2015, we have not provided deferred U.S. income taxes or foreign withholding taxes on temporary
differences of approximately $108.3 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 was approximately $34.5 billion at June 30, 2015.
Income taxes paid were $4.4 billion, $5.5 billion, and $3.9 billion in fiscal years 2015, 2014, and 2013, respectively.
Uncertain Tax Positions
Unrecognized tax benefits as of June 30, 2015, 2014, and 2013, were $9.6 billion, $8.7 billion, and $8.6 billion,
respectively. If recognized, these tax benefits would affect our effective tax rates for fiscal years 2015, 2014, and
2013, by $7.9 billion, $7.0 billion, and $6.5 billion, respectively.
As of June 30, 2015, 2014, and 2013, we had accrued interest expense related to uncertain tax positions of $1.7
billion, $1.5 billion, and $1.3 billion, respectively, net of federal income tax benefits. Interest expense on
unrecognized tax benefits was $237 million, $235 million, and $400 million in fiscal years 2015, 2014, and 2013,
respectively, and was included in income tax expense.