Support.com 2006 Annual Report Download - page 72

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SUPPORTSOFT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 8. Income Taxes (Continued)
purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
December 31,
2006 2005
Deferred tax assets:
Accruals and reserves $ 1,743 $ 580
Capitalized research and development 5 —
Deferred revenue 829 1,046
Net operating loss carryforwards 18,045 15,034
Research and development tax credits 3,973 3,958
Capitalized research and development 45 66
Intangible assets 2,647 2,724
Fixed assets 293 328
Gross deferred tax assets 27,580 23,736
Valuation allowance (27,378) (23,590)
Total deferred tax assets 202 146
Intangible assets (436) (288)
Total deferred tax liabilities (436) (288)
Net deferred tax liabilities $ (234) $ (142)
The Financial Accounting Standards Board’s Statement of Financial Accounting Standards No. 109 “Accounting for Income
Taxes” provides for the recognition of deferred tax assets if realization of such assets is more likely than not to occur. Based upon the
weight of available evidence, which includes its historical operating performance, reported cumulative net losses since inception and
difficulty in accurately forecasting its results, the Company provided a full valuation allowance against its net deferred tax assets. The
Company reassesses the need for its valuation allowance on a quarterly basis.
The net valuation allowance (increased) decreased by approximately $(3.8) million, and $677,000, during the years ended
December 31, 2006, and 2005, respectively.
As of December 31, 2006, the Company had federal and state net operating loss carryforwards of approximately $48.0 million and
$27.9 million, respectively. The Company also had federal and state research and development credit carryforwards of approximately
$2.3 million and $2.2 million, respectively. The federal net operating loss and credit carryforwards will expire at various dates
beginning in 2018 through 2026, if not utilized. The state net operating loss carryforwards will expire at various dates beginning in
2007 through 2016, if not utilized. The state research and development credit carryforwards do not have an expiration date.
Utilization of the net operating loss carryforwards and credits may be subject to substantial annual limitation due to the ownership
change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation
may result in the expiration of net operating losses and credits before utilization.
68
Source: SUPPORTSOFT INC, 10−K, March 16, 2007