eTrade 2007 Annual Report Download - page 127

NOTE 16—ACCOUNTS PAYABLE, ACCRUED AND OTHER LIABILITIES
Accounts payable, accrued and other liabilities consist of the following (dollars in thousands):
December 31,
2007 2006
Deposits received for securities loaned $2,014,151 $1,012,831
Accounts payable and accrued expenses 366,891 335,117
Other payables to brokers, dealers and clearing organizations 295,600 350,221
Derivative liabilities 200,293 78,710
Subserviced loan advances 73,212 44,780
Fails to receive 51,177 84,864
Senior and convertible debt accrued interest 35,581 20,125
Facility restructuring and other exit activities liability 26,651 26,892
Deferred tax liabilities — 58,545
Other 151,991 318,611
Total accounts payable, accrued and other liabilities $3,215,547 $2,330,696
NOTE 17—INCOME TAXES
Effective January 1, 2007, the Company adopted FIN 48. As a result of the implementation, the Company
recognized a $14.9 million increase to its liability for unrecognized tax benefits, which was accounted for as a
reduction to the beginning balance of retained earnings. The total amount of gross unrecognized tax benefits as of
January 1, 2007 was $150.4 million. Of this total amount at January 1, 2007, $51.6 million (net of the federal
benefit on state issues) represents the amount of unrecognized tax benefits that, if recognized, would favorably
affect the effective income tax rate in future periods. A reconciliation of the beginning and ending amount of
unrecognized tax benefits is as follows (dollars in thousands):
Balance at January 1, 2007 $150,428
Additions based on tax positions related to prior years 1,402
Additions based on tax positions related to the current year 8,687
Reductions based on tax positions related to prior years (136)
Reductions based on tax positions related to the current year (79,551)
Settlements with taxing authorities (5,472)
Statue of limitations lapses (505)
Balance at December 31, 2007 $ 74,853
At December 31, 2007, the unrecognized tax benefit was $74.9 million. Of this total amount, $52.5 million
(net of federal benefits on state issues) represents the amount of unrecognized tax benefits that, if recognized,
would favorably affect the effective income tax in future periods.
The following table summarizes the tax years that are either currently under examination or remain open
under the statute of limitations and subject to examination by the major tax jurisdictions in which the Company
operates:
Jurisdiction Open Tax Year
Canada 2002 – 2007
Hong Kong 1997 – 2007
United Kingdom 2005 – 2007
United States 2004 – 2007
Various States(1) 1999 – 2007
(1) Includes California, Georgia, Illinois, New Jersey, New York and Virginia.
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