Zynga 2011 Annual Report Download - page 79

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Table of Contents
We have not provided U.S. income taxes and foreign withholding taxes on the undistributed earnings of our profitable foreign subsidiaries
as of December 31, 2011 because we intend to permanently reinvest such earnings outside the United States. If these foreign earnings were to be
repatriated in the future, the related U.S. tax liability may be reduced by any foreign income taxes previously paid on these earnings. As of
December 31, 2011, the cumulative amount of earnings upon which U.S. income taxes have not been provided is approximately $1.2 million.
Deferred tax assets and liabilities consist of the following (in thousands):
In determining the need for a valuation allowance, the Company weighs both positive and negative evidence in the various taxing
jurisdictions in which it operates to determine whether it is more likely than not that its deferred tax assets are recoverable. In assessing the
ultimate realizability of its net deferred tax assets, the Company considers its past performance, available tax strategies, and expected future
taxable income. At December 31, 2011 and December 31, 2010, the Company recorded a valuation allowance of $113.3 million and $5.7
million, respectively, against its net deferred tax assets, as it believes it is more likely than not that these benefits will be not be realized. The
realizable amount relates to potential carryback benefit to 2010. Included in the increase of $107.0 million is approximately $0.3 million of
valuation allowance that was recorded against goodwill.
75
December 31,
2011
2010
Deferred tax assets:
Deferred revenue
14,355
$
16,545
Net operating loss carryforwards
17,502
12,582
Accrued compensation
112,422
6,482
Tax credit carryforwards
25,811
249
Deferred rent
11,804
2,542
Accrued expenses
5,532
2,108
State taxes
1,858
1,148
Charitable contributions
1,448
—
Other
615
189
Valuation allowance
(113,352
)
(5,698
)
Net deferred tax assets
77,995
36,147
Deferred tax liabilities:
Acquired intangible assets
(4,495
)
(13,838
)
Depreciation
(62,957
)
(11,820
)
Prepaid expenses
(828
)
(330
)
Net deferred tax liabilities
(68,280
)
(25,988
)
Net deferre1d taxes
9,715
$
10,159
December 31,
2011
2010
Recorded as:
Current deferred tax assets
23,515
$
24,399
Other current assets
150
—
Other current liabilities
—
(
117
)
Non
-
current deferred tax liabilities
(13,950
)
(14,123
)
Net deferred tax assets
9,715
$
10,159