Oracle 2010 Annual Report Download - page 199

Total provision for income taxes $ 2,864 $ 2,108 $ 2,241
The components of our deferred tax liabilities and assets were as follows:
May 31,
(in millions) 2011 2010
Deferred tax liabilities:
Unrealized gain on stock $ (130 ) $ (130 )
Acquired intangible assets (1,816 ) (2,128 )
Other (44 ) (101 )
Total deferred tax liabilities $ (1,990 ) $ (2,359 )
Deferred tax assets:
Accruals and allowances $ 543 $ 629
Employee compensation and benefits 742 649
Differences in timing of revenue recognition 305 67
Depreciation and amortization 483 357
Tax credit and net operating loss carryforwards 2,675 2,916
Other 119 250
Total deferred tax assets $ 4,867 $ 4,868
Valuation allowance $ (772 ) $ (649 )
Net deferred tax assets $ 2,105 $ 1,860
Recorded as:
Current deferred tax assets $ 1,189 $ 1,159
Non-current deferred tax assets 1,076 1,267
Current deferred tax liabilities (in other current liabilities) (101 ) (142 )
Non-current deferred tax liabilities (59 ) (424 )
Net deferred tax assets $ 2,105 $ 1,860
We provide for United States income taxes on the undistributed earnings and the other outside basis temporary differences of foreign
subsidiaries unless they are considered indefinitely reinvested outside the United States. At May 31, 2011, the amount of temporary
differences related to undistributed earnings and other outside basis temporary differences of investments in foreign subsidiaries upon which
United States income taxes have not been provided was approximately $16.1 billion and $4.9 billion, respectively. If these undistributed
earnings were repatriated to the United States, or if the other outside basis differences were recognized in a taxable transaction, they would
generate foreign tax credits that would reduce the federal tax liability associated with the foreign dividend or the otherwise taxable
transaction. Assuming a full utilization of the foreign tax credits, the potential deferred tax liability associated with these temporary
differences of undistributed earnings and other outside basis temporary differences would be approximately $4.6 billion and $1.6 billion,
respectively.
Our net deferred tax assets were $2.1 billion and $1.9 billion as of May 31, 2011 and May 31, 2010, respectively. We believe it is more
likely than not that the net deferred tax assets will be realized in the foreseeable future. Realization of our net deferred tax assets is
dependent upon our generation of sufficient taxable income in future years in appropriate tax jurisdictions to obtain benefit from the
reversal of temporary differences, net operating loss carryforwards, and tax credit carryforwards. The amount of deferred tax assets
considered realizable is subject to adjustment in future periods if estimates of future taxable income change.
The valuation allowance was $772 million at May 31, 2011 and $649 million at May 31, 2010. Substantially all of the valuation allowance
relates to tax assets established in purchase accounting. Any subsequent reduction of that portion of the valuation allowance and the
recognition of the associated tax benefits associated with our acquisitions will be recorded to our provision for income taxes subsequent to
our final determination of the valuation allowance or the conclusion of the measurement period (as defined above), whichever comes first.
At May 31, 2011, we had federal net operating loss carryforwards of approximately $751 million. These losses expire in various years
between fiscal 2012 and fiscal 2030, and are subject to limitations on their utilization. We had state net operating loss carryforwards of
approximately $3.2 billion, which expire between fiscal 2012 and fiscal 2030, and are subject to limitations on their utilization. We had
Source: ORACLE CORP, 10-K, June 28, 2011 Powered by Morningstar® Document Research℠