Table of Contents ENPHASE ENERGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A summary of significant components of the Company’s deferred tax assets and liabilities as of December 31, 2023 and 2022 is as follows: December 31, 2023 2022 (In thousands) Deferred tax assets: Allowances and reserves $ 53,191 $ 40,166 Net operating loss and tax credit carryforwards 23,267 26,748 Stock-based compensation 15,811 20,230 Deferred revenue 53,656 40,120 Fixed assets, goodwill and intangibles — 609 Convertible notes and related hedges 38,773 49,405 Capitalized research and development expense 83,098 47,870 Other 15,189 11,099 Subtotal 282,985 236,247 Total deferred tax assets 282,985 236,247 Deferred tax liabilities: Fixed assets and intangibles (2,833) — Unremitted foreign earnings (5,189) (3,755) Deferred cost of goods sold (27,782) (32,449) Total deferred tax liabilities (35,804) (36,204) Net deferred tax asset $ 247,181 $ 200,043 The Company's accounting for deferred taxes involves the evaluation of a number of factors concerning the realizability of the Company's deferred tax assets. Assessing the realizability of deferred tax assets is dependent upon several factors, including the likelihood and amount, if any, of future taxable income in relevant jurisdictions during the periods in which those temporary differences become deductible. The Company's management forecasts taxable income by considering all available positive and negative evidence including its history of operating income or losses and its financial plans and estimates which are used to manage the business. These assumptions require significant judgment about future taxable income. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are reduced. As of December 31, 2023, the Company evaluated its undistributed foreign earnings and identified $81.6 million in earnings that it does consider to be permanently reinvested that may be subject to withholding taxes in local jurisdictions when they are distributed. The Company has recorded a provision of approximately $5.2 million for the taxes that would fall due when such earnings are repatriated. The Company has approximately $5.0 million of federal tax credit and $12.7 million of state tax credit carryforwards. The federal credits begin to expire in 2031 and the state credits can be carried forward indefinitely. As of December 31, 2023, the Company has foreign net operating losses of $5.9 million from GreenCom acquisition, which can be carried over indefinitely. Utilization of some of the federal credit carryforwards and state net operating loss and credit carryforwards are subject to annual limitations due to the “change in ownership” provisions of the Code and similar state provisions. The Company believes that no such change has occurred through December 31, 2023. Accounting for uncertain tax positions prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company is required to recognize in the financial statements the impact of a tax position, if that position is more- likely than-not of being sustained on audit, based on the technical merits of the position. The Company recorded a net charge for unrecognized tax benefits in 2023 of $5.5 million. Enphase Energy, Inc. | 2023 Form 10-K | 118