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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income (loss) before taxes consisted of the following:
|  | Years Ended December 31,
(In thousands) |  | 2020 |  | 2019 |  | 2018
Domestic |  | $ | (43,029) |  |  | $ | (81,316) |  |  | $ | (63,829) |
Foreign |  | 3,398 |  |  | (5,700) |  |  | (6,799) |
|  | $ | (39,631) |  |  | $ | (87,016) |  |  | $ | (70,628) |
The provision for (benefit from) income taxes was comprised of:
|  | Years Ended December 31,
(In thousands) |  | 2020 |  | 2019 |  | 2018
Federal: |  |  |  |  |  |
Current |  | $ | (456) |  |  | $ | 2,932 |  |  | $ | 5,451 |
Deferred |  | 2,018 |  |  | 2,016 |  |  | 82,726 |
State: |  |  |  |  |  |
Current |  | 652 |  |  | 657 |  |  | 333 |
Deferred |  | (1,528) |  |  | (1,198) |  |  | 522 |
Foreign: |  |  |  |  |  |
Current |  | 3,097 |  |  | 1,708 |  |  | 1,592 |
Deferred |  | 195 |  |  | (2,712) |  |  | (3,295) |
|  | $ | 3,978 |  |  | $ | 3,403 |  |  | $ | 87,329 |
The differences between Rambus’ effective tax rate and the U.S. federal statutory regular tax rate were as follows:
|  | Years Ended December 31,
|  | 2020 |  | 2019 |  | 2018
U.S. federal statutory rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income tax (expense)/benefit |  | (2.5) |  |  | 0.9 |  |  | (1.2) |
Withholding tax |  | (3.7) |  |  | (3.5) |  |  | (7.7) |
Foreign rate differential |  | (4.4) |  |  | (1.6) |  |  | (0.2) |
Research and development credit |  | (4.4) |  |  | 1.2 |  |  | 2.2 |
Executive compensation |  | (1.7) |  |  | (1.2) |  |  | (0.1) |
Stock-based compensation |  | 0.6 |  |  | (2.3) |  |  | (2.8) |
Foreign tax credit |  | (85.7) |  |  | 3.4 |  |  | 7.7 |
Foreign derived intangible income deduction |  | 12.3 |  |  | 4.6 |  |  | 14.8 |
Divestiture |  | (18.8) |  |  | 4.8 |  |  | — |
Other |  | 0.7 |  |  | 0.3 |  |  | 0.7 |
Valuation allowance |  | 76.6 |  |  | (31.5) |  |  | (158.0) |
|  | (10.0) | % |  | (3.9) | % |  | (123.6) | %
The components of the net deferred tax assets (liabilities) were as follows:
|  | As of December 31,
(In thousands) |  | 2020 |  | 2019
Deferred tax assets: |  |  |  |
Depreciation and amortization |  | $ | 13,199 |  |  | $ | 13,995 |
Lease liabilities |  | 8,716 |  | 10,734 |
Other timing differences, accruals and reserves |  | 5,347 |  | 9,522
Deferred equity compensation |  | 4,631 |  | 4,456
Net operating loss carryovers |  | 15,756 |  | 20,900
Tax credits |  | 169,063 |  | 233,407
Total gross deferred tax assets |  | 216,712 |  |  | 293,014 |
Deferred tax liabilities: |  |  |  |
Lease right-of-use assets |  | (6,392) |  | (10,400) |
Convertible debt |  | (130) |  | (151)
Deferred revenue |  | (45,845) |  | (94,763) |
Total gross deferred tax liabilities |  | (52,367) |  | (105,314) |
Total net deferred tax assets |  | 164,345 |  |  | 187,700 |
Valuation allowance |  | (174,328) |  |  | (196,972) |
Net deferred tax liabilities |  | $ | (9,983) |  |  | $ | (9,272) |
|  | As of December 31,
(In thousands) |  | 2020 |  | 2019
Reported as: |  |  |  |
Non-current deferred tax assets |  | $ | 4,353 |  |  | $ | 4,574 |
Non-current deferred tax liabilities |  | (14,336) |  |  | (13,846) |
Net deferred tax liabilities |  | $ | (9,983) |  |  | $ | (9,272) |
The Company periodically evaluates the realizability of its net deferred tax assets based on all available evidence, both positive and negative. During the third quarter of 2018, the Company assessed the changes in its underlying facts and circumstances and evaluated the realizability of its existing deferred tax assets based on all available evidence, both positive and negative, and the weight accorded to each, and concluded a full valuation allowance associated with U.S. federal and California deferred tax assets was appropriate. During 2020, as a result of the enactment of California A.B. 85 and the temporary suspension of California net operating loss utilization for tax years 2020 through 2022, the Company released $0.6 million of the valuation allowance on its deferred tax asset for California research and development tax credits. The Company continues to maintain a full valuation allowance on the remainder of its California and U.S. federal deferred tax assets as it does not expect to be able to fully utilize them. The following table presents the tax valuation allowance information for the years ended December 31, 2020, 2019 and 2018:
(In thousands) |  | Balance at Beginning of Period |  | Charged (Credited) to Operations |  | Charged to Other Account* |  | Valuation Allowance Release |  | Valuation Allowance Set up |  | Balance at End of Period
Tax Valuation Allowance |  |  |  |  |  |  |  |  |  |  |  |
Year ended December 31, 2018 |  | $ | 50,911 |  |  | — |  |  | 9,238 |  |  | — |  |  | 113,729 |  |  | $ | 173,878 |
Year ended December 31, 2019 |  | $ | 173,878 |  |  | 23,094 |  |  | — |  |  | — |  |  | — |  |  | $ | 196,972 |
Year ended December 31, 2020 |  | $ | 196,972 |  |  | (22,019) |  |  | 3 |  |  | (628) |  |  | — |  |  | $ | 174,328 |
______________________________________ * Amounts not charged to operations are charged to other comprehensive income or retained earnings. As of December 31, 2020, Rambus had California and other state net operating loss carryforwards of $202.2 million and $35.8 million, respectively. As of December 31, 2020, Rambus had federal research and development tax credit carryforwards of $38.8 million and foreign tax credits of $123.5 million. As of December 31, 2020, Rambus had California research and development tax credit carryforwards of $30.3 million and California alternative minimum tax credit carryforwards of $0.2 million. The federal foreign tax credits and research and development credits begin to expire in 2021. Approximately $9.9 million of federal foreign tax credits will expire in 2021. The California net operating losses begin to expire in 2027. The California research and development credits carry forward indefinitely. In the event of a change in ownership, as defined under federal and state tax laws, Rambus’ net operating loss and tax credit carryforwards could be subject to annual limitations. The annual limitations could result in the expiration of the net operating loss and tax credit carryforwards prior to utilization. As of December 31, 2020, the Company had $134.0 million of unrecognized tax benefits including $23.6 million recorded as a reduction of long-term deferred tax assets, $109 million recorded as a reduction of other assets associated with refundable withholding taxes previously withheld from licensees in South Korea (Korea), and $1.9 million recorded in long-term income taxes payable. As a result of recent court rulings in Korea, the Company has determined that they may be entitled to refund claims for foreign taxes previously withheld from licensees in Korea. The Company recognizes that there are numerous risks and uncertainties associated with the ultimate collection of this refund, and has therefore established an offsetting reserve for the entire amount of potentially refundable withholding taxes previously withheld in Korea. If recognized, $110.9 million would be recorded as an income tax benefit in the consolidated statement of operations. As of December 31, 2019, the Company had $115.7 million of unrecognized tax benefits including $22.8 million recorded as a reduction of long-term deferred tax assets, $91 million recorded as a reduction of other assets associated with refundable withholding taxes previously withheld from licensees in South Korea (Korea), and $1.8 million recorded in long term income taxes payable. A reconciliation of the beginning and ending amounts of unrecognized income tax benefits for the years ended December 31, 2020, 2019 and 2018 was as follows:
|  | Years Ended December 31,
(In thousands) |  | 2020 |  | 2019 |  | 2018
Balance at January 1 |  | $ | 115,653 |  |  | $ | 23,482 |  |  | $ | 22,652 |
Tax positions related to current year: |  |  |  |  |  |
Additions |  | 18,600 |  |  | 16,485 |  |  | 1,032 |
Tax positions related to prior years: |  |  |  |  |  |
Additions |  | — |  |  | 76,158 |  |  | 115 |
Reductions |  | (209) |  |  | (472) |  |  | (317) |
Settlements |  | — |  |  | — |  |  | — |
Balance at December 31 |  | $ | 134,044 |  |  | $ | 115,653 |  |  | $ | 23,482 |
Rambus recognizes interest and penalties related to uncertain tax positions as a component of the income tax provision (benefit). At December 31, 2020 and 2019, an immaterial amount of interest and penalties are included in long-term income taxes payable. Rambus files income tax returns for the U.S., California, India, and various other state and foreign jurisdictions. The U.S. federal returns are subject to examination from 2016 and forward. The California returns are subject to examination from 2010 and forward. In addition, any research and development credit carryforward or net operating loss carryforward generated in prior years and utilized in these or future years may also be subject to examination. The India returns are subject to examination from fiscal year ending March 2012 and forward. The Company is currently under examination by California for the 2010, 2011 and 2018 tax years. The Company’s India subsidiary is under examination by the Indian tax administration for tax years beginning with 2011, except for 2014, which was assessed in the Company’s favor. These examinations may result in proposed adjustments to the income taxes as filed during these periods. Management regularly assesses the likelihood of outcomes resulting from income tax examinations to determine the adequacy of their provision for income taxes and believes their provision for unrecognized tax benefits is adequate. The estimated potential reduction in the Company’s unrecognized tax benefits in the next 12 months would not be material. At December 31, 2020, no other income taxes (state or foreign) have been provided on undistributed earnings of approximately $16.4 million from the Company’s international subsidiaries since these earnings have been, and under current plans will continue to be, indefinitely reinvested outside the United States. However, if such earnings were distributed, the Company would incur approximately $1.8 million of foreign withholding taxes and an immaterial amount of U.S. taxes.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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