TiVo 2013 Annual Report Download - page 95

Table of Contents
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  

Federal tax at statutory rate $36,367 $(1,480)$ 36,039
State taxes 1,628 778 657
Stock Based Compensation 559 (318)360
Federal Research Tax Credit 333 — —
Non-deductible compensation expense 3,209 3,442 2,477
Non-deductible expenses and other 1,163 90 35
Foreign withholding tax —256 150
Change in valuation allowance (211,170)(1,732)(38,911)
Total tax expense $(167,911)$1,036 $ 807
The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets are presented below:
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 
Deferred tax assets: 
Net operating loss carryforwards $ 78,294 $ 108,749
Research and alternative minimum tax credits 34,022 33,628
Deferred revenue and rent 48,885 43,053
Capitalized research and development 4,175 7,367
Stock based compensation 14,180 14,504
Other 17,001 16,339
Total deferred tax assets 196,557 223,640
Deferred tax liabilities:
TRA intangibles (1,025)(3,174)
Total deferred tax liabilities (1,025)(3,174)
Valuation allowance (24,419)(220,466)
Net deferred tax assets (liabilities) $171,113 $—
Our benefit for income taxes for the year ended January 31, 2014 is due to the release of the valuation allowance of $211.2 million.
During the second quarter of fiscal 2014, due to the resolution of a material litigation in regards to the Company's intellectual property the
Company concluded that it was more likely than not that it would be able to realize the benefit of a portion of its deferred tax assets in the
future. The Company based this conclusion on recent historical book and taxable income and projections of future operating income. As a
result, the Company released $211.2 million during fiscal 2014, of the valuation allowance attributable to federal and all states, except for the
state of California.
For tax years beginning on or after January 1, 2013 companies are required to apportion income for California purposes under a single
sales factor. Effective for the 2012 fiscal year the Company had revalued its California deferred tax assets under single sales factor. The
Company continues to maintain a valuation allowance of $24.4 million on its California deferred tax assets as it is not more likely than not
that such deferred assets will be recognized under current California law.
As of January 31, 2014 the Company had net operating loss carryforwards for federal and state income tax purpose of approximately
$284.1 million and $172.9 million, respectively, available to reduce future income subject to income taxes. Of these amounts,
approximately $85.6 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 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 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
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