Letter To Shareholders - Mitac

C. Components of deferred income tax assets and liabilities:
December 31, 2009 December 31, 2008
Amount Tax Effect Amount Tax Effect
Current (shown in other current assets):
Temporary differences
Provision for loss on obsolete
inventories $ 1,170,946 $ 234,189 $ 1,123,376 $ 280,844
Allowance for sales rebate 237,379 47,476 826,152 206,538
Unrealized warranty 571,682 114,336 763,168 190,791
Others 466,826 99,321 787,335 196,834
Loss carryforward 133,743 26,749 175,135 43,784
Valuation allowance ( 10,597 ) ( 10,218 )
$ 511,474 $ 908,573
Non-current:
Temporary differences
Unrealized investment gain ( $ 2,110,854 ) ( $ 422,170 ) ( $ 2,110,854 ) ( $ 527,714 )
Provision for market value decline and 231,518 92,607 - -
obsolescence of inventories
Allowance for doubtful accounts 195,314 78,126 - -
Allowance for sales rebate 1,828,508 731,403 - -
Unrealized marketing expenses 442,086 176,835 - -
Others 2,206,280 450,676 1,713,514 428,379
Loss carryforward 785,175 314,070 - -
Investment tax credits 705,100 218,753
Valuation allowance ( 2,014,087 ) ( 406,536 )
$ 112,560 ( $ 287,118 )
D. The Company is eligible for investment tax credits under the statute for
Upgrading Industry and losses available to be carry forward as of December 31,
2009 are as follows:
Item Total tax credits Unused tax credits
Final year tax
credits are due
Research and Development $ 468,884 $ 370,661 2012
Research and Development 273,935 268,527 2013
Loss carryforward 26,749 26,749 2019
$ 665,937
The Company assumed investment tax credits of Tyan Computer Technology Co.,
Ltd. as follows:
Final year tax
Item Total tax credits Unused tax credits credits are due
Research and Development $ 65,912 $ 65,912 2012
E. As of December 31, 2009, the Company's income tax returns through 2007 have
been assessed and approved by the Tax Authority. The Company had appealed to
the Supreme Court of R.O.C. for its 2000, 2001 and 2003 income tax returns,
because taxable incomes were adjusted and parts of the research and
development for tax credits were assessed as not qualified for tax credits, which
resulted in no income tax refundable for year 2000 and an additional tax payable
for year 2001. However, the tax appeals had been dismissed by the Supreme
Court in 2000 and were sent back to the Taiwan High Court for retrial in 2001.
The Company has paid half of the additional tax payable for year 2001. In
addition, the Company had applied for tax re-examination with the Tax Authority
for the 2004, 2005, 2006 and 2007 income tax returns, because all the research
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