Support.com 2009 Annual Report Download - page 72

Table of Contents
SUPPORT.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In November 2009, the Worker, Homeownership and Business Assistance Act of 2009 was signed into law, which extends the carryback of net operating
losses for both federal regular tax and Alternative Minimum Tax (AMT). The income tax benefit related to this Act is recorded in the current year and relates to
our ability to reclaim previously paid AMT taxes in prior years which were reported as part of our deferred tax assets offset by a full valuation allowance.
Generally, the amount of tax expense or benefit allocated to continuing operations is determined without regard to the tax effects of other categories of
income or loss, such as income from discontinued operations. However, an exception is provided in ASC 740 when there is a pre-tax loss from continuing
operations and pre-tax income from other categories in the current year. As a result, for the year ended December 31, 2009, we recorded a tax expense of $4.9
million in discontinued operations related to the gain on sale of the Enterprise business, and recorded an off-setting tax benefit of $4.9 million in continuing
operations.
ASC 740 clarifies the accounting for uncertainties in income taxes by prescribing guidance for the recognition, de-recognition and measurement in
financial statements of income tax positions taken in previously filed tax returns or tax positions expected to be taken in tax returns, including a decision whether
to file or not to file in a particular jurisdiction. ASC 740 requires that any liability created for unrecognized tax benefits be disclosed. The application of ASC 740
may also affect the tax bases of assets and liabilities and therefore may change or create deferred tax liabilities or assets.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
Years Ended December 31,
2009 2008 2007
Balance at beginning of year $ 2,361 $ 2,005 $ 1,844
Increase related to prior year tax positions 1,331 — —
Decrease related to prior year tax positions — — —
Increase related to current year tax positions 211 369 171
Settlements with tax authorities (90) — —
Decrease related to lapse of statute of limitations (107) (13) (10)
Balance at end of year $ 3,706 $ 2,361 $ 2,005
Our total amounts of unrecognized tax benefits that, if recognized, would affect its effective tax rate is $0.8 million and $0.8 million as of December 31,
2009 and 2008, respectively.
Upon adoption of FIN 48, our policy to include interest and penalties related to unrecognized tax benefits within our provision for (benefit from) income
taxes did not change. We had $121,000 and $58,000 accrued for payment of interest and penalties related to unrecognized tax benefit as of December 31, 2009
and 2008, respectively. We recognized $65,000 of interest and penalties related to unrecognized tax benefits income taxes during the year ended December 31,
2009.
As of December 31, 2009, the amount of recognized tax benefit where it is reasonably possible that a significant change may occur in the next 12 months
is approximately $68,000. The change would result from expiration of a statute of limitations in a foreign jurisdiction.
The tax years 1997 to 2009 remain open in several jurisdictions, none of which has individual significance.
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Source: Support.com, Inc., 10-K, March 12, 2010 Powered by Morningstar® Document Research℠