Table:
|  | June 30, 2019 | June 24, 2018 |
| --- | --- | --- |
|  | (in thousands) |  |
| Deferred tax assets: |  |  |
| Tax carry forwards | $231,390 | $206,073 |
| Allowances and reserves | 97,671 | 118,559 |
| Equity-based compensation | 14,661 | 16,189 |
| Inventory valuation differences | 18,516 | 14,021 |
| Prepaid cost sharing | 74,139 | 65,644 |
| Outside basis differences of foreign subsidiaries | 16,260 | — |
| Other | 17,972 | 16,514 |
| Gross deferred tax assets | 470,609 | 437,000 |
| Valuation allowance | (226,928) | (199,839) |
| Net deferred tax assets | 243,681 | 237,161 |
| Deferred tax liabilities: |  |  |
| Intangible assets | (9,883) | (21,558) |
| Convertible debt | (46,993) | (60,252) |
| Capita assets | (83,298) | (61,429) |
| Amortization of goodwill | (11,299) | (10,738) |
| Outside basis differences of foreign subsidiaries | — | (6,656) |
| Other | (8,752) | (7,955) |
| Gross deferred tax liabilities | (160,225) | (168,588) |
| Net deferred tax assets | $83,456 | $68,573 |
Paragraphs:
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as the tax effect of carryforwards. Significant components of the Company’s net deferred tax assets and liabilities were as follows:
The increase in the gross deferred tax assets and valuation allowance between fiscal year 2019 and 2018 is primarily due to increases in tax carryforwards.
Realization of the Company’s net deferred tax assets is based upon the weighting of available evidence, including such factors as the recent earnings history and expected future taxable income. The Company believes it is more likely than not that such deferred tax assets will be realized with the exception of $227.0 million primarily related to California deferred tax assets. At June 30, 2019, the Company continued to record a valuation allowance to offset the entire California deferred tax asset balance due to the single sales factor apportionment resulting in lower taxable income in California.
At June 30, 2019, the Company had federal net operating loss carryforwards of $109.8 million. The majority of these losses will begin to expire in fiscal year 2020, and are subject to limitation on their utilization.
At June 30, 2019, the Company had state net operating loss carryforwards of $58.5 million. If not utilized, these losses will begin to expire in fiscal year 2020 and are subject to limitation on their utilization.
At June 30, 2019, the Company had state tax credit carryforwards of $322.4 million. Substantially all of these credits can be carried forward indefinitely.
Question:
What is the percentage change in the gross deferred tax assets from 2018 to 2019?
Answer: (470609-437000)/437000 = 7.69