Expedia 2010 Annual Report Download - page 97

We reduced our current income tax payable by $27 million, $10 million and $19 million for the years ended
December 31, 2010, 2009 and 2008, for tax deductions attributable to stock-based compensation. We recorded
less than $1 million for 2010 and 2009 and $2 million for 2008 of the related income tax benefits of this stock-
based compensation as a reduction of goodwill.
The tax effect of cumulative temporary differences and net operating losses that give rise to our deferred tax
assets and deferred tax liabilities as of December 31, 2010 and 2009 are as follows:
December 31,
2010 2009
(In thousands)
Deferred tax assets:
Provision for accrued expenses ................................... $ 48,204 $ 56,824
Revenue items ................................................. — 16,620
Net operating loss and tax credit carryforwards ....................... 36,909 36,243
Capitalized R&D expenditures .................................... 3,631 7,121
Stock-based compensation ....................................... 45,830 45,210
Investment impairment .......................................... 8,593 8,572
Other ........................................................ 13,707 13,560
Total deferred tax assets ......................................... 156,874 184,150
Less valuation allowance ........................................ (45,498) (45,715)
Net deferred tax assets .......................................... $111,376 $ 138,435
Deferred tax liabilities:
Prepaid merchant bookings and prepaid expenses ..................... $ (44,043) $ (53,854)
Intangible assets ............................................... (215,232) (222,313)
Investment in subsidiaries ....................................... (8,104) (8,421)
Unrealized gains ............................................... (9,978) (14,480)
Property and equipment ......................................... (54,380) (41,849)
Other ........................................................ (5,460) —
Total deferred tax liabilities ...................................... $(337,197) $(340,917)
Net deferred tax liability ......................................... $(225,821) $(202,482)
At December 31, 2010, we had federal, state and foreign net operating loss carryforwards (“NOLs”) of
approximately $9 million, $38 million and $96 million. If not utilized, the federal and state NOLs will expire at
various times between 2011 and 2030, $70 million foreign NOLs can be carried forward indefinitely, and
$26 million foreign NOLs will expire at various times between 2011 and 2030.
At December 31, 2010, we had a valuation allowance of approximately $45 million related to the portion of
net operating loss carryforwards and other items for which it is more likely than not that the tax benefit will not
be realized. This amount represented a decrease of less than $1 million over the amount recorded as of
December 31, 2009.
We have not provided deferred U.S. income taxes on undistributed earnings of certain foreign subsidiaries
that we intend to reinvest permanently outside of the United States; the total amount of such earnings as of
December 31, 2010 was $244 million. Should we distribute earnings of foreign subsidiaries in the form of
dividends or otherwise, we may be subject to U.S. income taxes. Due to complexities in tax laws and various
assumptions that would have to be made, it is not practicable to estimate the amount of unrecognized deferred
U.S. taxes on these earnings.
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