Amazon.com 2007 Annual Report Download - page 79

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AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The significant components of deferred income tax expense attributable to income from operations for 2007,
2006, and 2005 were as follows:
Year Ended December 31,
2007 2006 2005
(in millions)
Deferred tax expense (benefit) exclusive of the effect of the items listed below ..... $(91) $ 32 $188
Decrease in valuation allowance .......................................... (8) (10) (90)
Tax benefit of net operating and capital loss carryforwards ..................... — — (28)
Total deferred tax expense (benefit) ................................... $(99) $ 22 $ 70
Deferred income tax assets and liabilities were as follows:
December 31,
2007 2006
(in millions)
Deferred tax assets:
Net operating losses—stock-based compensation (1) .............................. $120 $120
Net operating losses—other .................................................. 28 23
Assets held for investment ................................................... 167 174
Revenue items ............................................................. 58 20
Expense items, including stock-based compensation ............................... 210 149
Net tax credits (2) .......................................................... 2 7
Deferred tax assets under FIN 48 .............................................. 22 —
Total gross deferred tax assets ............................................ 607 493
Less valuation allowance (3) ............................................. (195) (216)
Deferred tax assets, net of valuation allowance ........................... 412 277
Deferred tax liabilities:
Expense items ............................................................. (24) (13)
Deferred tax liabilities under FIN 48 ........................................... (3) —
Deferred tax assets, net of valuation allowance and deferred tax liabilities ......... $385 $264
(1) Presented net of fully reserved NOL deferred tax asset of $219 million and $381 million at December 31,
2007 and 2006. The total gross deferred tax assets relating to our excess stock-based compensation NOLs at
December 31, 2007 and 2006 were $339 million and $501 million (relating to approximately $1.1 billion
and $1.6 billion of NOLs).
(2) Presented net of fully reserved deferred tax assets associated with tax credits of $95 million and $67 million
at December 31, 2007 and 2006. Total tax credits available to be claimed in future years are approximately
$129 million and $101 million as of December 31, 2007 and 2006.
(3) Relates primarily to deferred tax assets that would only be realizable upon the generation of future capital
gains and net income in certain taxing jurisdictions.
We have not fully utilized NOLs which were generated in the years 1996 through 2003, so that the statute of
limitations for these years remains open for purposes of adjusting the amounts of the losses carried forward from
those years. The majority of our NOLs begin to expire in 2019 and thereafter.
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