eTrade 2005 Annual Report Download - page 177

Table of Contents
Deferred income taxes are recorded when revenues and expenses are recognized in different periods for financial statement and tax
return purposes. The temporary differences and tax carry-forwards that created deferred tax assets and deferred tax liabilities are as
follows (in thousands):
December31,
2005
2004
Deferred tax assets:
Reserves and allowances
$
20,826
$
15,237
Net unrealized gain on equity investments and Bank
assets held-for-sale
109,871
78,411
Net operating loss carry-forwards
59,433
68,939
Deferred compensation
13,613
9,235
Capitalized technology development
4,739
7,382
Tax credits
—
6,520
Restructuring reserve and related write-downs
56,805
66,116
Other
—
1,225
Total deferred tax assets
265,287
253,065
Deferred tax liabilities:
Internally developed software
(20,925
)
(20,690
)
Acquired intangibles
(21,759
)
(36,552
)
Basis differences in investments
(117,642
)
(53,007
)
Loan fees
(6,966
)
(7,092
)
Depreciation and amortization
(32,232
)
(28,753
)
Purchased software
(3,024
)
(3,024
)
Retained servicing rights
(2,755
)
(6,298
)
Other
(16,774
)
(3,859
)
Total deferred tax liabilities
(222,077
)
(159,275
)
Valuation allowance
(39,359
)
(52,671
)
Net deferred tax asset
$
3,851
$
41,119
The Company maintains a valuation allowance of $39.4 million and $52.7 million at December31, 2005 and 2004, respectively, against
certain of its deferred tax assets, as it is more likely than not that they will not be fully realized. The deferred tax assets for which a
valuation allowance has been established include certain state and foreign country net operating loss carry-forwards and excess tax
bases in certain illiquid investments.
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2006. EDGAR Online, Inc.