eBay 2010 Annual Report Download - page 129
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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following is a reconciliation of the difference between the actual provision for income taxes and the
provision computed by applying the federal statutory rate of 35% for 2008, 2009 and 2010 to income before
income taxes (in thousands):
Year Ended December 31,
2008 2009 2010
Provision at statutory rate .................... $764,248 $1,007,703 $ 734,456
Permanent differences:
Foreign income taxed at different rates ..... (519,203) (475,967) (441,044)
Gain on sale of Skype ................... — (498,360) —
Joltid settlement ....................... — 120,339 —
Legal entity restructuring ................ — 184,410 (23,649)
Change in valuation allowance ............ 48,614 58,670 1,407
Stock-based compensation ............... 26,730 41,436 7,595
State taxes, net of federal benefit .......... 54,356 49,606 31,003
Tax credits ........................... (9,251) (13,352) (48,745)
Other ................................ 38,596 15,569 36,463
$ 404,090 $ 490,054 $ 297,486
Deferred tax assets and liabilities are recognized for the future tax consequences of differences between the
carrying amounts of assets and liabilities and their respective tax bases using enacted tax rates in effect for the
year in which the differences are expected to be reversed. Significant deferred tax assets and liabilities consist of
the following (in thousands):
December 31,
2009 2010
Deferred tax assets:
Net operating loss and credits ................. $120,907 $ 90,390
Accruals and allowances .................... 387,140 310,075
Stock-based compensation ................... 211,260 117,021
Net unrealized losses ....................... 5,077 1,882
Net deferred tax assets ...................... 724,384 519,368
Valuation allowance ........................ (68,746) (42,740)
655,638 476,628
Deferred tax liabilities:
Unremitted foreign earnings .................. — (230,646)
Acquisition-related intangibles ................ (151,563) (102,894)
Depreciation and amortization ................ (80,956) (165,563)
Available-for-sale securities .................. (161,536) (199,421)
Foreign statutory reserves .................... (17,613) —
(411,668) (698,524)
$ 243,970 $(221,896)
As of December 31, 2010, our federal, foreign and state net operating loss carryforwards, or NOLs, for
income tax purposes were approximately $91.0 million, $138.1 million and $231.5 million, respectively. The
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