Stamps.com 2012 Annual Report Download - page 69

STAMPS.COM INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
In making these determinations, we considered the available positive and negative evidence, including our recent earnings trend, expected future
taxable income and the federal and state effective tax rates related to the future taxable income. As of December 31, 2012, we continued to
maintain a valuation allowance for the remainder of our gross deferred tax assets.
In September 2008, the State of California passed legislation temporarily suspending the use of NOLs to offset current state income tax expense
for the tax years 2008 and 2009. In October 2010, the State of California passed legislation extending this suspension for tax years 2010 and
2011. We did not incur any additional California state income tax as a result of the state NOL suspension during the year ended December 31,
2010 as we were able to offset 100% of our state income tax liability through the use of our research and development tax credits. During 2011
we were in a taxable loss position for tax reporting purposes and as a result we did not use any tax credits. We recorded a current tax provision
for corporate alternative minimum federal taxes and state taxes of approximately $565,000, $0 and $34,000 during the years ended December
31, 2012, 2011 and 2010, respectively. Total tax benefit recorded was approximately $13.9 million, $8.5 and $3.9 million during the years ended
December 31, 2012, 2011 and 2010, respectively.
Under the guidance related to uncertain tax positions, we are required to determine whether it is more likely than not that a tax position will be
sustained upon examination based on the technical merits of the position. A tax position that meets the more likely than not recognition threshold
is measured to determine the amount of liability or benefit to recognize in the financial statements.
In accordance with the guidance we have evaluated our research and development tax credits for uncertain tax positions. As of December 31,
2012 we have research and development tax credits totaling $6.8 million for Federal and California purposes. In addition, we had $1.9 million
of unrecognized federal tax benefits which is subject to examination by the taxing authorities and upon further examination, we may increase or
decrease our unrecognized tax benefit based on the results of the examination.
The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the years ended December 31, 2012, 2011 and
2010 (in thousands):
Table of Contents
Unrecognized
Tax Benefits
Balance at December 31, 2009
$
(1,710
)
Additions for tax positions of prior years
(23
)
Addition for tax position of the current year
—
Settlement
—
Balance at December 31, 2010
$
(1,733
)
Reduction for tax positions of prior years
71
Addition for tax position of the current year
(83
)
Settlement
—
Balance at December 31, 2011
$
(1,745
)
Reductions for tax positions of prior years
—
Additions for tax position of the current year
(160
)
Settlement
—
Balance at December 31, 2012
$
(1,905
)
F
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