Stamps.com 2003 Annual Report Download - page 55

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Table of Contents
STAMPS.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
10. Income Taxes
The provision for income taxes consists solely of minimum state taxes. The Company’s effective tax rate differs from the statutory federal
income tax rate primarily as a result of the establishment of a valuation allowance for the future benefits to be received from the net operating
loss carryforwards and research tax credit carryforwards. The tax effect of temporary differences that give rise to a significant portion of the
deferred tax assets and liabilities at December 31, 2003 and 2002 are presented below (in thousands):
Because the Company is uncertain as to when and if it may realize its deferred tax assets, the Company has placed a valuation allowance
against its otherwise recognizable deferred tax assets.
The Company has a net operating loss carryforward of approximately $274.4 million and $212.7 million for federal and state income tax
purposes at December 31, 2003, respectively, and approximately $262.6 million and $206.9 million for federal and state income tax purposes at
December 31, 2002, respectively, which can be carried forward to offset future taxable income. The Company also has available a tax credit
carryforward at December 31, 2003 of approximately $747,000, which can be carried forward to offset future taxable liabilities. The
Company’s federal net operating loss will begin to expire in 2018, state net operating loss will begin to expire in 2006. The federal credits
begin to expire in 2018 and the state credits will begin to expire in 2006. The Federal Tax Reform Act of 1986 and similar state tax laws
contain provisions which may limit the net operating losses carryforwards to be used in any given year upon the occurrence of certain events,
including a significant change in ownership interests. The provision for income taxes is comprised of (in thousands):
F-16
2003 2002
Deferred tax assets (liabilities):
Net operating loss carryforward
$
105,710
$
100,660
Research credits
633
633
Other credits
114
114
Depreciation
86
—
Capitalized start
-
up costs
445
1,268
Accruals
1,253
939
Total deferred tax assets
108,241
103,614
Valuation allowance
(108,241
)
(103,614
)
Net deferred tax assets
$
—
$
—
2003
2002
2001
Current
Federal
$
—
$
—
$
—
State
1
2
4
1
2
4
Deferred
—
—
—
Provision for income taxes
$
1
$
2
$
4