TeleNav 2015 Annual Report Download - page 113

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recognized due to uncertainties with respect to the interpretation of the tax ruling, the outcome of the audit of the amended returns, and the
method in which the overpayment would ultimately be settled.
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. Significant components of our net deferred tax assets were as
follows (in thousands):
All available evidence, both positive and negative, was considered to determine whether, based upon the weight of the evidence, a
valuation allowance for deferred tax assets is needed. In fiscal 2015, we released the valuation allowance of $0.8 million on deferred tax assets,
net of liabilities, in Germany due to cumulative net income, expectation of continued profits, and continued growth and sustainability of the
European business.
In fiscal 2015, we recorded a valuation allowance on the majority of our deferred tax assets, net of liabilities, since the assets are not more
likely than not to be realized based upon our assessment of all positive and negative evidence. Realization of deferred tax assets is dependent
upon future taxable earnings and losses, the timing of which is uncertain. Due to losses in fiscal 2014 and 2015, and expected losses in fiscal
2016 and potentially future years in the U.S., we maintained a full valuation allowance on deferred tax assets in the U.S. Due to foreign
operating losses in previous years and continued foreign earnings volatility, we continued to maintain a full valuation allowance for our foreign
deferred tax assets in China, Brazil and the United Kingdom. Our valuation allowance increased from the prior year by approximately $4.7
million , $10.1 million , and $699,000 in fiscal 2015 , 2014 and 2013 , respectively.
We provide for U.S. income taxes on the earnings of foreign subsidiaries unless the subsidiaries' earnings are permanently reinvested
outside the U.S. To the extent that the foreign earnings previously treated as permanently reinvested are repatriated, the related U.S. liability may
be reduced by any foreign income taxes paid on these earnings. As of June 30, 2015 , the cumulative amount of earnings upon which U.S.
income taxes have not been provided was approximately $4.1 million . The net unrecognized deferred tax liability for these earnings was
approximately $560,000 .
As of June 30, 2015 , we had federal and California net operating loss carryforwards for income tax purposes of $7.5 million and $10.9
million , respectively. These loss carryforwards will begin to expire in fiscal 2020 for federal purposes and fiscal 2016 for California purposes.
In addition, we had federal and California research and development tax credit carryforwards of $3.1 million and $5.6 million , respectively, as
of June 30, 2015 . The federal research credits will begin to
F-28
June 30,
2015 2014
Deferred tax assets:
Federal, state and foreign net operating losses
$
5,003
$
4,324
Federal and state tax credits
5,530
2,327
Stock-based compensation
4,570
3,867
Accrued expenses and reserves
5,331
5,826
Foreign tax credits
—
320
Capitalized expense
333
413
Unrealized losses on investments
306
54
Acquired intangible assets
233
—
Total deferred tax assets:
21,306
17,131
Deferred tax liabilities:
Property and equipment
(1,321
)
(1,808
)
Capitalized software
(1,150
)
(284
)
Acquired intangible assets
—
(
736
)
Unrealized gains on investments
(393
)
—
Total deferred tax liabilities:
(2,864
)
(2,828
)
Deferred tax assets, net of liabilities:
18,442
14,303
Valuation allowance - worldwide
(17,672
)
(12,969
)
Net deferred tax assets:
$
770
$
1,334