Green Dot 2011 Annual Report Download - page 79

GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 9—Related Party Transactions (continued)
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was due in February 2015. The loan was collateralized by 85,000 shares of our common stock owned by the officer
and a full recourse promissory note. We classified the outstanding balance of the loan, including capitalized interest
of $7,000 at July 31, 2009 as a reduction in stockholders’ equity. We recorded interest on the loan of $1,000 for the
five months ended December 31, 2009 and $5,000 for the year ended July 31, 2009 as additional paid-in-capital.
Note 10—Income Taxes
The components of income tax expense were as follows:
Year Ended December 31, Five Months Ended
December 31, 2009
Year Ended
July 31, 20092011 2010
(In thousands)
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,583 $ 26,638 $ 4,389 $ 22,645
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,096 1,466 1,845 5,988
Current income tax expense . . . . . . . . . . . . . . . . . . . 31,679 28,104 6,234 28,633
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251 (579) 3,114 (1,662)
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —(125) 416 (69)
Deferred income tax expense (benefit) . . . . . . . . . . . 251 (704) 3,530 (1,731)
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . $ 31,930 $ 27,400 $ 9,764 $ 26,902
Income tax expense for the years ended December 31, 2011 and 2010, the five months ended December 31,
2009 and the year ended July 31, 2009 varied from the amount computed by applying the federal statutory income
tax rate to income before income taxes. A reconciliation between the expected federal income tax expense using the
federal statutory tax rate of 35% and our actual income tax expense was as follows:
Year Ended December 31, Five Months Ended
December 31, 2009
Year Ended
July 31, 20092011 2010
U.S. federal statutory tax rate . . . . . . . . . . . . . . . . . . 35.0% 35.0% 35.0% 35.0%
State income taxes, net of federal benefit. . . . . . . . . 1.6 3.8 6.7 6.1
Non-deductible offering costs . . . . . . . . . . . . . . . . . . —2.4 — —
Change in tax state apportionment method . . . . . . . —(4.6) — —
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 2.7 — 0.9
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.0% 39.3% 41.7% 42.0%
The effective tax rates for the periods above differ from the expected federal statutory tax rate of 35% primarily
due to state income taxes, net of the federal tax benefit. Certain enacted tax law changes, which became effective
January 1, 2011, reduced the income we apportion to California from the comparable period in 2010, resulting in a
lower effective state tax rate in 2011. The year ended December 31, 2010 was impacted in large part by two discrete
items. The California Franchise Tax Board, or FTB, approved our petition to retroactively apply an alternative
apportionment method to our income tax returns filed for the five months ended December 31, 2009 and the year
ended July 31, 2009. We recognized this benefit in the year ended December 31, 2010. This tax benefit was partially
offset by non-deductible expenses related to our initial public offering recognized in the year ended December 31,
2010. Excluding the impact of these discrete items, our effective tax rate in 2010 would have been 41.5%.