TiVo 2010 Annual Report Download - page 42

Fiscal Year Ended January 31,
2011 2010
Deferred tax assets: (in thousands)
Net operating loss carryforwards $ 177,546 $ 155,353
Research and alternative minimum tax credits 22,081 15,418
Deferred revenue and rent 13,532 13,291
Capitalized research 19,714 26,478
Stock based compensation 12,473 11,686
Other 12,224 10,915
Total deferred tax assets 257,570 233,141
Valuation allowance (257,570) (233,141)
Net deferred tax assets: $ — $ —
Realization of deferred tax assets is dependent upon generation of sufficient future taxable income, the timing and amount of which are uncertain.
Accordingly, 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 was an increase of $24.4 million and $10.1 million for the years ended January 31, 2011 and January 31, 2010, respectively.
As of January 31, 2011, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $572.2 million
and $325.1 million respectively, available to reduce future income subject to income taxes. Of these amounts, approximately $54.9 million represent federal
and state tax deductions from stock option compensation. The tax benefit from these deductions will be recorded as an adjustment to additional paid-in capital
in the year in which the benefit is realized.
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 2031. The state net operating loss carryforwards expire
beginning in fiscal year 2012 through 2031. As of January 31, 2011, unused research and development tax credits of approximately $15.2 million and $19.9
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 December 17, 2010, President Obama signed into legislation, The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of
2010 which retroactively reinstated the research credit for amounts paid or incurred from January 1, 2010 through December 31, 2011. Prior to enactment of
this legislation, the federal research credit had expired for amounts paid or incurred after December 31, 2009. The Company has generated federal research
credits of approximately $5.0 million for fiscal year ended January 31, 2011.
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 elected 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 October 19, 2010, Governor Schwarzenegger signed into legislation, S.B. 858 which suspended net operating losses for tax years 2010 and 2011.
This is in addition to Assembly Bill 1452, which was signed into
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