INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

The income tax expense (benefit) for the year ended December 31, 2012 is as follows (in thousands):



	Current		Deferred			Total
Foreign	$	302,352	$	(13,792	)	$	288,560
Federal	3,681		37,956			41,637
State	12,203		(4,568		)	7,635
Total	$	318,236	$	19,596		$	337,832

The income tax expense (benefit) for the year ended December 31, 2011 is as follows (in thousands):



	Current		Deferred			Total
Foreign	$	251,542	$	(7,411	)	$	244,131
Federal	2,699		53,547			56,246
State	9,675		(1,389		)	8,286
Total	$	263,916	$	44,747		$	308,663

The income tax expense (benefit) for the year ended December 31, 2010 is as follows (in thousands):



	Current		Deferred			Total
Foreign	$	174,977	$	(9,309	)	$	165,668
Federal	4,510		37,481			41,991
State	1,114		9,368			10,482
Total	$	180,601	$	37,540		$	218,141

Tax effects of temporary differences that give rise to significant portions of deterred tax assets and liabilities

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities at December 31, 2012 and 2011 are as follows (in thousands):



	2012			2011
Deferred tax assets/(liabilities):
Net operating loss carryforward — U.S.	$	365,268		$	788,490
IRC 382 Disallowance	(121,252		)	(498,249		)
	244,016			290,241
Net operating loss carryforward — Foreign	19,638			20,437
Fixed assets	38			927
Investments	5,139			5,189
Accrued expenses	20,488			13,275
Stock-based compensation and other stock based payments	12,326			10,727
Other	15,881			8,884
Subtotal	317,526			349,680

Discount on convertible notes	(68,594		)	(31,032		)
Intangible assets and other	(47,053		)	(48,753		)
Less valuation allowance on deferred tax assets	(175,594		)	(171,755		)
Net deferred tax assets⁽¹⁾	$	26,285		$	98,140

(1) Includes current deferred tax liabilities of $0.8 million and $2.7 million as of December 31, 2012 and 2011, respectively, which are reported in "Accrued expenses and other current liabilities" on the Consolidated Balance Sheets.

Schedule of effective income tax rate reconciliation

The effective income tax rate of the Company is different from the amount computed using the expected U.S. statutory federal rate of 35% as a result of the following items (in thousands):



	2012			2011			2010
Income tax expense at federal statutory rate	$	616,654		$	478,728		$	261,199
Adjustment due to:
State taxes	5,296			5,168			6,762
Foreign rate differential	(175,932		)	(125,824		)	(58,927		)
Innovation Box Tax benefit	(118,916		)	(48,101		)	(11,645		)
Other	10,730			(1,308		)	20,752
Income tax expense	$	337,832		$	308,663		$	218,141

Reconciliation of unrecognized tax benefits

The following is a reconciliation of the total amount of unrecognized tax benefits (in thousands):



	2012			2011			2010
Unrecognized tax benefit — January 1	$	3,192		$	13,386		$	741
Gross increases — tax positions in current period	4,423			1,455			12,645
Gross increases — tax positions in prior period	343			876			—
Gross decreases — tax positions in prior period	(615		)	(12,525		)	—
Unrecognized tax benefit — December 31	$	7,343		$	3,192		$	13,386

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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