Enom 2010 Annual Report Download - page 126
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Table of Contents
Demand Media, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
(In thousands, except per share amounts)
10. Income Taxes (Continued)
The reconciliation of the federal statutory income tax rate of 35% to the Company's effective income tax rate is as follows:
December 31,
2008 December 31,
2009 December 31,
2010
Expected income tax benefit (expense) at U.S. statutory
rate $ 6,830 $ 6,895 $ 489
Difference between U.S. and foreign taxes (331) (324) (126)
State tax (expense) benefit, net of federal taxes 698 743 (433)
Non-deductible stock-based compensation (1,112) (937) (748)
Tax-exempt income 137 — —
State rate changes 2,123 (623) (350)
Indirect federal impact of state deferred taxes (790) 138 274
Valuation allowance (2,693) (8,743) (2,985)
Other (250) 80 (18)
Total income tax benefit (expense) $ 4,612 $ (2,771) $ (3,897)
The Company's international operations are primarily conducted through entities that are treated as branches for U.S. tax purposes and accordingly, the
financial results are included in domestic income (loss) before income taxes. The vast majority of the Company's international tax expense relates to local
taxes on these branch operations and there is not significant income (loss) before income taxes related to non-branch foreign subsidiaries for all periods
presented.
F-30