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Note 7 - Income Taxes
 9 Months Ended
Sep. 30, 2022
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

(7)

INCOME TAXES

 

Income tax rates and taxation systems in the jurisdictions where we and our subsidiaries conduct business vary and our subsidiaries are frequently subjected to minimum taxation regimes. In some jurisdictions, tax liabilities are based on gross revenues, statutory deemed profits or other factors, rather than on net income. We use a discrete effective tax rate method to calculate taxes for interim periods instead of applying the annual effective tax rate to an estimate of the full fiscal year due to the level of volatility and unpredictability of earnings in our industry, both overall and by jurisdiction.

 

For the three and nine months ended September 30, 2022, income tax expense reflects tax liabilities in various jurisdictions based on either revenue (deemed profit regimes) or pre-tax profits.

 

The tax liabilities for uncertain tax positions are primarily attributable to permanent establishment issues related to foreign jurisdictions, subpart F income inclusions and withholding taxes on foreign services. Penalties and interest related to income tax liabilities are included in income tax expense. Income tax payable is included in other current liabilities.

 

As of December 31, 2021, our balance sheet reflected approximately $202.8 million of net deferred tax assets prior to a valuation allowance of $204.9 million. As of September 30, 2022, we had net deferred tax assets of approximately $252.1 million prior to a valuation allowance of $254.3 million. The net deferred tax assets amounts as of September 30, 2022 include $51.0 million of deferred tax assets from the SPO acquisition offset by a valuation allowance of $51.0 million.

 

Management assesses all available positive and negative evidence to permit use of existing deferred tax assets.

 

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted on March 27, 2020 in the United States. The CARES Act includes several significant business tax provisions that would allow us to carry back net operating losses arising after 2017 to the five prior tax years. Considering the available carryback, we recorded an income tax receivable tax totaling $6.9 million in 2020 and we collected this receivable in 2021.

 

The Inflation Reduction Act (IRA) was enacted on August 16, 2022. The IRA includes provisions imposing a 1% excise tax on share repurchases that occur after December 31, 2022 and introduces a 15% corporate alternative minimum tax (CAMT) on adjusted financial statement income for tax years beginning after December 31, 2022. We currently are not expecting the IRA to have a material adverse impact to our financial statements.

 

With limited exceptions, we are no longer subject to tax audits by U.S. federal, state, local or foreign taxing authorities for years prior to March 2015. We are subject to ongoing examinations by various foreign tax authorities and do not believe that the results of these examinations will have a material adverse effect on our financial position, results of operations, or cash flows.