TiVo 2009 Annual Report Download - page 102

Table of Contents
Federal and state laws impose 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 determined that there have been multiple ownership changes since inception of the
Company. However, the ownership changes, do not place any limitation on the utilization of net operating losses and tax credit carryforwards.
The federal net operating loss carryforwards expire beginning in fiscal year ending 2019 through 2030. The state net operating loss carryforwards
expire beginning in fiscal year 2014 through 2030. As of January 31, 2010, unused research and development tax credits of approximately $11.0 million and
$15.4 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 fiscal 2020. California research and experimental tax credits carry forward indefinitely until utilized.
On November 6, 2009, President Obama signed into legislation, the Worker, Business assistance Act ("HR 3548"), which allows companies a five year
net operating loss carryback instead of a normal two year loss carryback, for losses generated either in tax year 2008 or 2009 to offset taxes paid in those
preceding years, including alternative minimum taxes paid. The Company is electing to carryback its tax year 2009 losses and claim a cash refund for the
alternative minimum taxes paid in tax year 2008 of approximately $800,000.
On February 17, 2009, President Obama signed into legislation, the American Recovery and Reinvestment Act of 2009, which allows corporations
without current tax liabilities to obtain refunds for certain research tax credit and alternative minimum tax credit carry forwards by electing to forego the 50%
additional first year depreciation for new property acquired after March 31, 2008 and placed in service before January 1, 2010. This Act extended the
provision of the Housing Assistance Tax Act of 2008 ("HR 3221"), which was set to expire for assets placed in service before January 1, 2009. The Company
has elected to obtain refunds for its research and development tax credit for the years ended January 31, 2010 and January 31, 2009. The amount of benefit for
refundable credits for fiscal years 2010 and 2009 were approximately $400,000 and $200,000, respectively.
On September 23, 2008, California signed into legislation the Assembly Bill 1452 which suspends for two years the deduction for net operating losses
("NOL"s) on a California tax return. Accordingly, a deduction for net operating loss carryovers will not be allowed for the Company's tax years 2008 and
2009. Also, Assembly Bill 1452 places restriction on the amount of allowable tax credit a company can utilize for the tax years 2008 and 2009. Under the new
California legislation a taxpayer cannot use otherwise allowable tax credit to reduce below 50% its "net tax". Credits affected by this limitation include the
research and development credit, the enterprise zone credit, and the low-income housing credit. The carryover period for any NOL, or NOL carryover that is
not allowed due to the suspension is extended by one additional year for losses incurred in tax years beginning in 2008, and two additional years for losses
incurred in tax years beginning before January 1, 2008.
The Company adopted the provisions of ASC 740-10 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:
Fiscal Year Ended January 31,
2010 2009
(in thousands)
Beginning Balance $ 9,572 $ 7,960
Additions based on tax positions related to current year 2,163 1,212
Additions for tax positions in prior years 28 400
Reduction for tax positions of prior years (4,418) —
Settlements — —
Ending Balance $ 7,345 $ 9,572
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