Amazon.com 2015 Annual Report Download - page 75

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Deferred income tax assets and liabilities are as follows (in millions):
December 31,
2015 2014
Deferred tax assets (1):
Net operating losses U.S. - Federal/States (2) $ 107 $ 357
Net operating losses foreign (3) 856 669
Accrued liabilities, reserves, & other expenses 854 780
Stock-based compensation 727 534
Deferred revenue 189 156
Assets held for investment 148 154
Depreciation & amortization 222 117
Other items 268 125
Tax credits (4) 41 115
Total gross deferred tax assets 3,412 3,007
Less valuation allowance (5) (1,069) (901)
Deferred tax assets, net of valuation allowance 2,343 2,106
Deferred tax liabilities:
Depreciation & amortization (1,970) (1,609)
Acquisition related intangible assets (203) (195)
Other items (88) (31)
Net deferred tax assets, net of valuation allowance $ 82 $ 271
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(1) Deferred tax assets related to net operating losses and tax credits are presented net of tax contingencies.
(2) Excluding $380 million and $261 million of deferred tax assets as of December 31, 2015 and 2014, related to net operating
losses that result from excess stock-based compensation and for which any benefit realized will be recorded to
stockholders’ equity.
(3) Excluding $2 million of deferred tax assets as of December 31, 2015 and 2014, related to net operating losses that result
from excess stock-based compensation and for which any benefit realized will be recorded to stockholders’ equity.
(4) Excluding $447 million and $268 million of deferred tax assets as of December 31, 2015 and 2014, related to tax credits
that result from excess stock-based compensation and for which any benefit realized will be recorded to stockholders’
equity.
(5) Relates primarily to deferred tax assets that would only be realizable upon the generation of net income in certain foreign
taxing jurisdictions and future capital gains.
As of December 31, 2015, our federal, foreign, and state net operating loss carryforwards for income tax purposes were
approximately $1.1 billion, $3.4 billion, and $2.0 billion. The federal and state net operating loss carryforwards are subject to
limitations under Section 382 of the Internal Revenue Code and applicable state tax law. If not utilized, a portion of the federal,
foreign, and state net operating loss carryforwards will begin to expire in 2020, 2016, and 2016, respectively. As of
December 31, 2015, our tax credit carryforwards for income tax purposes were approximately $725 million. If not utilized, a
portion of the tax credit carryforwards will begin to expire in 2017.
The Company’s consolidated balance sheets reflect deferred tax assets related to net operating losses and tax credit
carryforwards excluding amounts resulting from excess stock-based compensation. Amounts related to excess stock-based
compensation are accounted for as an increase to additional paid-in capital if and when realized through a reduction in income
taxes payable.
Tax Contingencies
We are subject to income taxes in the U.S. (federal and state) and numerous foreign jurisdictions. Significant judgment is
required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of
business, there are many transactions and calculations for which the ultimate tax determination is uncertain. We establish
reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These
reserves are established when we believe that certain positions might be challenged despite our belief that our tax return
positions are fully supportable. We adjust these reserves in light of changing facts and circumstances, such as the outcome of
tax audits. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered
appropriate.