XML 46 R15.htm IDEA: XBRL DOCUMENT v2.4.0.8
Income Taxes
9 Months Ended
Sep. 30, 2013
Income Taxes [Abstract]  
Income Taxes
Note 9. Income Taxes

For the three months ended September 30, 2013 and 2012, the Company’s tax benefit was $169,000 and $64,000, respectively. For the nine months ended September 30, 2013 and 2012, the Company’s tax benefit was $97,000 and tax expense was $122,000 respectively. The Company’s income tax benefit for the three and nine-month periods ended September 30, 2013 was primarily attributable to a release of uncertain tax position reserves, partially offset by income taxes of the Company’s international operations. The Company’s income tax benefit for the three-month period ended September 30, 2012 was primarily related to gains and losses on marketable and long term investments recorded in other comprehensive loss partially offset by income taxes of the Company’s international operations.  The Company’s tax expense for the nine-month period ended September 30, 2012 was primarily related to income taxes of the Company’s international operations partially offset by benefits for income taxes related to gains and losses on marketable and long term investments recorded in other comprehensive loss.

The Company utilizes the asset and liability method of accounting for income taxes, under which deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. As of September 30, 2013 and December 31, 2012, the Company had a 100% valuation allowance against its U.S. deferred tax assets. Significant management judgment is required in determining any valuation allowance recorded against deferred tax assets. In evaluating the ability to recover deferred tax assets, the Company considered available positive and negative evidence giving greater weight to its recent cumulative losses and its ability to carry-back losses against prior taxable income and lesser weight to its projected financial results due to the challenges of forecasting future periods. The Company also considered, commensurate with its objective verifiability, the forecast of future taxable income including the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies.
 
On January 2, 2013, the President signed into law The American Taxpayer Relief Act of 2012, or ATRA. Under prior law, a taxpayer was entitled to a research tax credit for qualifying amounts incurred through December 31, 2011. The ATRA extends the research credit for two years for qualified research expenditures incurred through the end of 2013. The extension of the research credit is retroactive and includes amounts incurred after 2011. The benefit of the reinstated credit did not impact the Company’s statement of operations for the three and nine months ended September 30, 2013, as the research and development credit carryforwards are offset by a full valuation allowance.