8x8 2015 Annual Report Download - page 80

At March 31, 2015, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $142.8
million and $66.7 million, respectively, which expire at various dates between 2016 and 2035. The net operating loss carryforwards include
approximately $30.9 million resulting from employee exercises of non-
qualified stock options or disqualifying dispositions, the tax benefits of
which, when realized, will be accounted for as an addition to additional paid-
in capital rather than as a reduction of the provision for income
taxes. In addition, at March 31, 2015, the Company had research and development credit carryforwards for federal and California tax reporting
purposes of approximately $3.3 million and $5.1 million, respectively. The federal income tax credit carryforwards will expire at various dates
between 2021 and 2035, while the California income tax credits will carry forward indefinitely. A reconciliation of the Company's provision for
income taxes to the amounts computed using the statutory U.S. federal income tax rate of 34% is as follows (in thousands):
The Company recognizes the tax benefit from uncertain tax positions if it is more likely than not that the tax positions will be sustained on
examination by the tax authorities, based on the technical merits of the position. The tax benefit is measured based on the largest benefit that has
a greater than 50% likelihood of being realized upon ultimate settlement. A reconciliation of the beginning and ending amount of unrecognized
tax benefits is as follows (in thousands):
At March 31, 2015, the company had a liability for unrecognized tax benefits of $2.4 million, all of which, if recognized, would decrease the
company's effective tax rate. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months.
The Company files U.S. federal and state income tax returns in jurisdictions with varying statutes of limitations. The Company has not been
under examination by income tax authorities in federal, state or other foreign jurisdictions. The 1996 through fiscal 2015 tax years generally
remain subject to examination by federal and most state tax authorities.
The Company's policy for recording interest and penalties associated with tax examinations is to record such items as a component of operating
expense income before taxes. During the fiscal year ended March 31, 2015, 2014 and 2013, the Company did not recognize any interest or
penalties related to unrecognized tax benefits.
73
Years Ended March 31,
2015 2014 2013
Tax provision at statutory rate
$
1,599
$
1,285
$
7,768
State income taxes before valuation allowance,
net of federal effect
269
196
822
Research and development credits
(725)
(1,534)
(385)
Change in valuation allowance
(1,480)
1,264
1,038
Compensation/option differences
(331)
(264)
(207)
Non
-
deductible compensation
746
605
403
Acquisition costs
-
230
-
Expiring CA NOLs
1,484
240
-
Foreign loss not benefited
1,192
271
-
Other
35
(74)
(40)
Total income tax provision
$
2,789
$
2,219
$
9,399
Unrecognized Tax Benefits
2015 2014 2013
Balance at beginning of year
$
2,165
$
3,024
$
2,483
Gross increases
-
tax position in prior period
27
-
73
Gross decreases
-
tax position in prior period
-
(1,081)
-
Gross increases
-
tax positions related to the current year
228
222
468
Settlements
-
-
-
Lapse of statute of limitations
-
-
-
Balance at end of year
$
2,420
$
2,165
$
3,024