Support.com 2009 Annual Report Download - page 71

Table of Contents
SUPPORT.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Our India based subsidiary was granted a tax holiday related to its research and development activities.
The tax holiday expires in 2011. The tax holiday had an immaterial impact on the current year statements. Significant components of our deferred tax assets and
liabilities are as follows (in thousands):
December 31,
2009 2008
Deferred tax assets:
Accruals and reserves $ 3,637 $ 5,223
Capitalized research and development 10 3
Deferred revenue — 625
Net operating loss carryforwards 36,304 31,057
Research and development tax credits 4,401 4,270
Other credits 147 90
Capitalized research and development — 24
Intangible assets 266 2,860
Fixed assets 395 258
Gross deferred tax assets 45,160 44,410
Valuation allowance (45,013) (44,320)
Total deferred tax assets 147 90
Deferred tax liabilities:
Intangible assets — —
Total deferred tax liabilities — —
Net deferred tax assets(liabilities) $ 147 $ 90
ASC 740 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 our 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 U.S. and most foreign net deferred tax assets. There is no valuation allowance against our
India deferred tax assets primarily relating to Minimum Alternative Tax (MAT). We reassess the need for our valuation allowance on a quarterly basis.
The net valuation allowance increased by approximately $0.7 million, and $7.0 million, during the years ended December 31, 2009, and 2008,
respectively.
As of December 31, 2009, we had federal and state net operating loss carryforwards of approximately $90.1 million and $53.3 million, respectively. We
also had federal and state research and development credit carryforwards of approximately $3.2 million and $3.1 million, respectively. The federal net operating
loss and credit carryforwards will expire at various dates beginning in 2018 through 2029, if not utilized. The state net operating loss carryforwards will expire at
various dates beginning in 2010 through 2029, if not utilized. The state research and development credit carryforwards do not have an expiration date.
Utilization of 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.
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Source: Support.com, Inc., 10-K, March 12, 2010 Powered by Morningstar® Document Research℠