TiVo 2010 Annual Report Download - page 43

legislation on September 23, 2008 and suspended for two years the deduction for net operating losses (NOLS) on a California tax return. Accordingly, a
deduction for net operating loss carryovers will not be allowed for the Company's tax years 2008 through 2011. Also, Assembly Bill 1452 places restrictions
on the amount of allowable credit a company can utilize for the tax year 2008 and 2009. Under the new California legislation a taxpayer cannot use otherwise
allowable credit to reduce below 50% its "net tax". Credits affected by this limitation include the research and development credits, the enterprise zone credits,
and the low-income housing credit. SB 8585 does not include this credit limitation for tax years 2010 and 2011.
The Company adopted the provisions for accounting for uncertainty in income taxes 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,
2011 2010 2009
(in thousands)
Beginning Balance $ 7,345 $ 9,572 7,960
Additions based on tax positions related to current year 2,609 2,163 1,212
Additions for tax positions in prior years — 28 400
Reduction for tax positions of prior years (1,209) (4,418) —
Ending Balance $ 8,745 $ 7,345 9,572
The total amount of unrecognized tax benefit, if recognized, that would affect the effective tax rate would be approximately $231,000 at January 31,
2011. The remaining unrecognized tax benefits at January 31, 2011 would not affect the Company’s effective tax rate if recognized due to the Company’s
deferred tax assets being fully offset by a valuation allowance. The Company does not expect that there will be a significant increase or decrease of the total
amount unrecognized tax benefits within the next 12 month.
The Company classifies interest and penalties related to uncertain tax positions in income tax expense, if applicable. The Company accrued
approximately $13,000 of interest or penalties related to unrecognized tax benefits recorded through January 31, 2011.
The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The open tax
years for the major jurisdictions are as follows:
Federal 2007 – 2011
California 2006 – 2011
However, due to the fact the Company has net operating losses and credits carried forward in most jurisdictions, certain items attributable to technically
closed years are still subject to adjustment by the relevant taxing authority through an adjustment to tax attributes carried forward to open years.
17. NET INCOME (LOSS) PER COMMON SHARE
Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding,
excluding unvested restricted stock.
The following table sets forth the computation of basic and diluted earnings per common share:
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