Support.com 2007 Annual Report Download - page 79

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SUPPORTSOFT, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 7. Income Taxes (Continued)
purposes. Significant components of the Company's deferred tax assets and liabilities are as follows (in thousands):
December 31,
2007
2006
Deferred tax assets:
Accruals and reserves $ 3,321 $ 1,743
Capitalized research and development 4 5
Deferred revenue 232 829
Net operating loss carryforwards 24,904 18,045
Research and development tax credits 4,147 3,973
Capitalized research and development 37 45
Intangible assets 3,225 2,647
Fixed assets 338 293
Gross deferred tax assets 36,208 27,580
Valuation allowance (36,005) (27,378)
Total deferred tax assets 203 202
Intangible assets (501) (436)
Total deferred tax liabilities (501) (436)
Net deferred tax liabilities $ (298) $ (234)
The Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes" provides for the
recognition of deferred tax assets if realization of such assets is more likely than not to occur. Based upon the weight of available evidence, which includes its
historical operating performance, reported cumulative net losses since inception and difficulty in accurately forecasting its results, the Company provided a full
valuation allowance against its net deferred tax assets. The Company reassesses the need for its valuation allowance on a quarterly basis.
The net valuation allowance increased by approximately $8.6 million, and $3.8 million, during the years ended December 31, 2007, and 2006, respectively.
As of December 31, 2007, the Company had federal and state net operating loss carryforwards of approximately $67.0 million and $46.2 million,
respectively. The Company also had federal and state research and development credit carryforwards of approximately $2.3 million and $2.4 million,
respectively. The federal net operating loss and credit carryforwards will expire at various dates beginning in 2018 through 2027, if not utilized. The state net
operating loss carryforwards will expire at various dates beginning in 2008 through 2017, if not utilized. The state research and development credit carryforwards
do not have an expiration date.
Utilization of the net operating loss carryforwards and credits may be subject to substantial annual limitation due to the ownership change limitations
provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating
losses and credits before utilization.
75
Source: SUPPORTSOFT INC, 10-K, March 13, 2008