Earthlink 2007 Annual Report Download - page 197
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HELIO, INC. and HELIO LLC
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
13. Income Taxes (Continued)
The significant components of the Company's deferred tax assets and liabilities are as follows (in thousands):
A reconciliation of the income tax provision (benefit) computed by applying the U.S. federal statutory rate of 35% to the loss before income
taxes and actual income tax expense (benefit) for the years ending December 31, 2006 and 2007 was as follows:
At December 31, 2007, the Company had federal and state net operating loss carry forwards of approximately $9.7 million, which begin to
expire on December 31, 2015 for state purposes and December 31, 2025 for federal tax purposes.
The Company adopted the provisions of FIN 48 on January 1, 2007. The cumulative effect at adoption of this interpretation did not result in
any adjustment to retained earnings. At January 1, 2007 and at December 31, 2007, the Company had no unrecognized tax benefits for purposes
of this pronouncement.
The Company's accounting policy is to recognize interest and penalties related to unrecognized tax benefits in income tax expense. At
December 31, 2007, the Company had no accrued interest or penalties related to unrecognized tax benefits.
The Company files income tax returns in the U.S. and in various state and local jurisdictions. The Company is subject to U.S. federal and
state income tax examinations by the taxing authorities in all of these jurisdictions for the years ended December 31, 2005 through December 31,
2007. No examinations are currently in process.
The Company does not expect the amount of its unrecognized tax benefits to significantly increase within the next twelve months.
33
December 31,
2006
December 31,
2007
Deferred income tax assets:
Tangible and intangible assets
18
17
Net operating loss carryforwards
3,802
3,963
Less: valuation allowance
(3,820
)
(3,980
)
Total deferred income tax assets
$
—
$
—
December 31,
2006
December 31,
2007
Federal income tax rate
(35.0
)%
(35.0
)%
State taxes, net of federal benefit
(5.7
)%
(5.7
)%
Effect of partner allocations and other permanent items
38.7
%
40.6
%
Change in valuation allowance
2.0
%
0.1
%
Total
—
%
—
%