Stamps.com 2015 Annual Report Download - page 86

TABLE OF CONTENTS
STAMPS.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
WearesubjecttotaxationintheU.S.andvariousstatejurisdictions.WearesubjecttoincometaxexaminationbyU.S.andstate
taxauthoritiesforthecalendaryearendedDecember31,2012andforward.However,totheextentallowedbylaw,thetaxing
authoritiesmayhavetherighttoexaminepriorperiodswhereNOLsandcreditsweregeneratedandcarriedforward,andmake
adjustmentsuptotheamountoftheNOLsandcreditsutilizedinopentaxyears.
Oureffectiveincometaxratediffersfromthestatutoryincometaxrateprimarilyasaresultofpermanenttaxadjustmentsfor
nondeductibleitemsandchangesoffederalandstatetaxrates.Thetaxeffectoftemporarydifferencesthatgiverisetoasignificant
portionofthedeferredtaxassetsandliabilitiesatDecember31,2015and2014arepresentedbelow(inthousands):
2015 2014
Deferredtaxassets(liabilities):    
Netoperatinglosscarryforward $ 22,024 $ 41,827
Taxcredits  6,872  5,992
Depreciation  (464)  (571)
Definitelivedintangibles  2,946  768
Indefinitelivedintangibles  (1,922)  (557)
Contingentconsideration  20,742  3,133
StockCompensation  4,800  1,412
Accruals  2,226  1,812
Totalnetdeferredtaxassets  57,224  53,816
Valuationallowance  —  —
Netdeferredtaxassets $ 57,224 $ 53,816
WehaveNOLcarry-forwardsofapproximately$123millionand$1.5millionforfederalandstateincometaxpurposes,
respectively,atDecember31,2015whichcanbecarriedforwardtooffsetfuturetaxableincome.Wehaveavailabletaxcreditcarry-
forwardsofapproximately$4.9millionand$1.9million,netofunrecognizedtaxbenefitforfederalandstateincometaxpurposes,
respectivelyatDecember31,2015,whichcanbecarriedforwardtooffsetfuturetaxableliabilities.OurfederalNOLswillbeginto
expirein2020.Thefederaltaxcreditsbegintoexpirein2018.UnderCalifornialaw,Californiataxcreditsdonothaveanexpiration
date.
Werecognizeexcesstaxbenefitsassociatedwiththeexerciseofstockoptionsdirectlytostockholders’equityonlywhenrealized.
Wehavemadeanaccountingpolicyelectiontoexcludefromthemeasurementoftheexcesstaxdeductionanyindirecteffectsofthe
taxdeduction.Accordingly,deferredtaxassetsarenotrecognizedforNOLcarry-forwardsresultingfromexcesstaxbenefits.Asof
December31,2015,deferredtaxassetsdonotincludeapproximately$21.2millionofthesetax-effectedexcesstaxbenefitsfrom
employeestockoptionexercisesthatareacomponentofourNOLcarry-forwards.Accordingly,additionalpaid-incapitalwillincrease
uptoanadditional$21.2millionifandwhensuchexcesstaxbenefitsarerealized.
BasedonourelectionunderASC718tousethe“with-and-without”approachwhenutilizingnetoperatinglossesconsistingof
otheroperatinglossesandexcesstaxbenefits,theexcesstaxbenefitwillbedeemedtobethelastbenefitutilized,andinaccordance
withASC718,benefitsforsharebasedpaymentsarenotrecordedtoAPICuntilsuchpaymentsresultinareductiontoincometaxes
payable.Our2015incometaxprovisionutilizedstateAPICtaintednetoperatinglossinthecurrentyearresultinginareductionto
incometaxespayableandabenefittoAPICintheamountof$618,000.
TheFederalTaxReformActof1986andsimilarstatetaxlawscontainprovisionsthatmaylimittheNOLcarryforwardstobe
usedinanygivenyearupontheoccurrenceofcertainevents,includingasignificantchangeinownershipinterests.Wemaintaina
studytounderstandthestatusofnetoperatinglosses.Basedonthatstudy,webelievethatwehavenotundergoneanInternalRevenue
Code(IRC)Section382changeofownershipthatwouldtriggeranimpairmentoftheuseofourNOLssinceoursecondaryofferingin
December1999.UnderIRCSection382rules,achangeinownershipcanoccurwheneverthereisashiftinownershipbymorethan50
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