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Table of Contents
SUPPORTSOFT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Cumulative unremitted foreign earnings that are considered to be indefinitely reinvested outside the United States, and on which no U.S. taxes have been
accrued, were approximately $4.3 million at December 31, 2008. If such earnings were distributed, the Company would not accrue any additional taxes due to
the full valuation allowance against its deferred tax assets.
In fiscal year 2007, we adopted Financial Accounting Standards Interpretation, or FIN No.48, “Accounting for Uncertainty in Income Taxes—an
Interpretation of FASB Statement No.109,” which prescribes a recognition threshold and measurement attribute for the financial statement recognition and
measurement of uncertain tax positions taken or expected to be taken in our income tax return, and also provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure, and transition. FIN No. 48 utilizes a two-step approach for evaluating uncertain tax positions
accounted for in accordance with SFAS No. 109, “Accounting for Income Taxes. Step one, Recognition, requires us to determine if the weight of available
evidence indicates that a tax position is more likely than not to be sustained upon audit, including resolution of related appeals or litigation processes, if any. Step
two, Measurement, is based on the largest amount of benefit, which is more likely than not to be realized on ultimate settlement. The cumulative effect of
adopting FIN No. 48 on January 1, 2007 is recognized as a change in accounting principle, recorded as an adjustment to the opening balance of retained earnings
on the adoption date.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
Balance at December 31, 2007 $2,005
Additions based on tax positions related to the current year 369
Reductions resulting from lapse of a statue of limitations (13)
Settlements —
Balance at December 31, 2007 $2,361
The Company’s total amounts of unrecognized tax benefits that, if recognized, would affect its effective tax rate is $422,000 and $744000 as of
December 31, 2007 and December 31, 2008, respectively.
Upon adoption of FIN 48, the Company’s policy to include interest and penalties related to unrecognized tax benefits within the Company’s provision for
(benefit from) income taxes did not change. The Company had $40,000 and $58,000 accrued for payment of interest and penalties related to unrecognized tax
benefit as of December 1, 2007 and December 31, 2008, respectively. The Company recognized $18,000 of interest and penalties related to unrecognized tax
benefits income taxes during the year ended December 31, 2008.
As of December 31, 2008, the amount of recognized tax benefit where it is reasonably possible that a significant change may occur in the next 12 months
is approximately $59,000. The change would result from expiration of a statute of limitations in a foreign jurisdiction.
The tax years 1997 to 2008 remain open in several jurisdictions, none of which has individual significance.
77
Source: SUPPORTSOFT INC, 10-K, March 11, 2009