Overstock.com 2010 Annual Report Download - page 132
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Table of Contents
Overstock.com, Inc.
Notes to Consolidated Financial Statements (Continued)
21. INCOME TAXES (Continued)
The income tax provision differs from the amount computed by applying the U.S. federal income tax rate of 35% to loss before income taxes for the
following reasons (in thousands):
Year ended December 31,
2010 2009 2008
U.S. federal income tax (provision) benefit at statutory rate $ (4,940) $ (2,762) $ 3,880
State income tax benefit (expense), net of federal expense (86) (112) 147
Stock based compensation expense (484) (781) (1,491)
Other (73) (64) (2,009)
Change in valuation allowance 5,224 3,462 (527)
Income tax provision $ (359) $ (257) $ —
We are subject to audit by the IRS and various states for periods since inception. We do not believe there will be any material changes in our
unrecognized tax positions over the next 12 months. Our policy is to recognize interest and penalties accrued on any unrecognized tax positions as a
component of income tax expense.
A reconciliation of the beginning and ending tax contingencies, excluding interest and penalties, is as follows (in thousands):
Year ended December 31,
2010 2009 2008
Beginning balance $ 112 $ — $ —
Additions for tax positions related to the current year — 112 —
Additions for tax positions taken in prior years 79 — —
Ending balance $ 191 $ 112 $ —
The interest and penalties accrued on tax contingencies as of December 31, 2010 and 2009 were $53,000 and $34,000, respectively. Tax years beginning
in 2006 are subject to examination by taxing authorities, although net operating loss and credit carryforwards from all years are subject to examinations and
adjustments for at least three years following the year in which the attributes are used.
22. RELATED PARTY TRANSACTIONS
On April 1, 2009, Mr. James V. Joyce resigned from his position as a member of the Board of Directors of the Company. Mr. Joyce's resignation was not
the result of a disagreement with us on any matter relating to our operations, policies or practices. Mr. Joyce and the Company concurrently ended our
consulting arrangement with Icent LLC, which is a management consulting company of which Mr. Joyce is the chief executive officer, and through which
Mr. Joyce provided consulting services to us. In connection with the termination of the consulting arrangement, we accrued $1.25 million, which was paid to
Mr. Joyce on April 1, 2009.
On occasion, Haverford-Valley, L.C. (an entity owned by our Chairman and Chief Executive Officer) and certain affiliated entities make travel
arrangements for our executives and pay the travel
F-43