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STAMPS.COM INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the years ended December 31, 2011, 2010 and
2009 (in thousands):
Our policy is to recognize interest and penalties expense, if any, related to unrecognized tax benefits as a component of income tax expense. As
of December 31, 2011, we have not recorded any interest and penalty expense.
We remain subject to examination by the relevant tax authorities. These include the 2008 through 2010 tax years for federal purposes and the
2009 through 2010 tax years for California purposes.
Our effective tax rate differs from the statutory federal income tax rate primarily as a result of the establishment of a valuation allowance for the
future benefits to be received from the deferred tax assets including net operating loss carryforwards and tax credit carryforwards. The tax effect
of temporary differences that give rise to a significant portion of the deferred tax assets and liabilities at December 31, 2011 and 2010 are
presented below (in thousands):
We have an NOL carryforward of approximately $230 million and $125 million for federal and state income tax purposes, respectively, at
December 31, 2011 which can be carried forward to offset future taxable income. We have available tax credit carryforward of approximately
$4.6 million and $2.0 million for federal and state income tax purposes, respectively at December 31, 2011, which can be carried forward to
offset future taxable liabilities. Our federal NOLs will begin to expire in 2020, and our state NOLs will begin to expire in 2012. The federal tax
credits begin to expire in 2018. Under California law, California tax credits do not have an expiration date.
Table of Contents
Unrecognized
Tax Benefits
Balance at December 31, 2008
—
Additions for tax positions of prior years
(1,557
)
Addition for tax position of the current year
(153
)
Settlement
—
Balance at December 31, 2009
$
(1,710
)
Additions for tax positions of prior years
(23
)
Addition for tax position of the current year
—
Settlement
—
Balance at December 31, 2010
$
(1,733
)
Reductions for tax positions of prior years
71
Additions for tax position of the current year
(83
)
Settlement
—
Balance at December 31, 2011
$
(1,745
)
2011
2010
Deferred tax assets (liabilities):
Net operating loss carryforward
$
77,737
$
85,455
Tax credits
4,161
4,260
Depreciation
84
240
Amortization
775
972
Accruals
2,540
3,380
Total deferred tax assets
85,297
94,307
Valuation allowance
(69,172
)
(86,657
)
Net deferred tax assets
$
16,125
$
7,650
F
-
20