TiVo 2007 Annual Report Download - page 85

Table of Contents
The tax effects of temporary differences that give rise to significant portions of the Company's deferred tax assets are presented below:
Fiscal Year Ended January 31,
2008 2007
(In thousands)
Deferred tax assets:
Net operating loss and credits $ 171,251 $ 159,436
Deferred revenue and rent 39,923 48,977
Capitalized research 38,194 44,757
Other 17,292 12,647
Total deferred tax assets $ 266,660 $ 265,817
Valuation allowance (266,660) (265,817)
Net deferred tax assets (liabilities) $ — $ —
Management has established a valuation allowance for the portion of deferred tax assets for which realization is uncertain. The net change in the total
valuation allowance for the years ended January 31, 2008, 2007, and 2006 was an increase of $0.8 million, $5.0 million, and $17.6 million, respectively.
As of January 31, 2008, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $457.0 million
and $203.0 million, respectively, available to reduce future income subject to income taxes. Of these amounts $25.0 million represents federal and state tax
deductions from stock option compensation.
The federal net operating loss carryforwards expire beginning in 2013 through 2027. The state net operating loss carryforwards expire beginning in
2013 through 2018.
As of January 31, 2008, unused research and development tax credits of approximately $8.4 million and $9.5 million, respectively are available to
reduce future federal and California income taxes. The federal research credit carryforwards will begin to expire if not utilized by 2013. California research
and experimental tax credits carryforward indefinitely until utilized.
Federal and state laws impose substantial restrictions on the utilization of net operating loss and tax credit carryforwards in the event of an "ownership
change," as defined in Section 382 of the Internal Revenue Code. The Company has not yet determined whether an ownership change occurred due to
significant stock transactions in each of the reporting years disclosed. If an ownership change has occurred, utilization of the net operating loss and tax credit
carryforwards could be significantly reduced.
The Company adopted the provisions of FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" (FIN 48), as of February 1, 2007.
At implementation, the Company had approximately $7.5 million of unrecognized tax benefits, none of which would currently affect the Company's effective
tax rate if recognized due to the Company's deferred tax assets being fully offset by a valuation allowance. A reconciliation of the beginning and ending
amount of unrecognized tax benefits is as follows:
(In thousands)
Balance at February 1, 2007 $ 7,515
Additions based on tax positions related to current year 445
Additions for tax positions of prior years —
Reduction for tax positions of prior years —
Settlements —
Balance at January 31, 2008 $ 7,960
The Company would classify interest and penalties related to uncertain tax positions in income tax expense, if applicable. There was no interest expense
or penalties related to unrecognized tax benefits recorded through January 31, 2008
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