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INCOME TAXES | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
INCOME TAXES | 16. INCOME TAXES The components of (loss) income before (benefit from) income taxes are:
(in thousands) | 2019 |  | 2018 |  | 2017
Domestic | $ | (51,396 | ) |  | $ | (27,494 | ) |  | $ | 57,493 |
Foreign | (83,450 | ) |  | 15,951 |  |  | 28,742 |
(Loss) income before (benefit from) income taxes | $ | (134,846 | ) |  | $ | (11,543 | ) |  | $ | 86,235 |
The components of the (benefit from) income taxes are:
(in thousands) | 2019 |  | 2018 |  | 2017
Current: |  |  |  |  |
Federal | $ | 1,050 |  |  | $ | (1,862 | ) |  | $ | (18,109 | )
State | 405 |  |  | 287 |  |  | 97 |
Foreign | 3,449 |  |  | 10,313 |  |  | 8,479 |
Total current provision for (benefit from) | 4,904 |  |  | 8,738 |  |  | (9,533 | )
Deferred: |  |  |  |  |
Federal | (25,356 | ) |  | (18,939 | ) |  | (2,049 | )
State | (5,143 | ) |  | (3,702 | ) |  | (214 | )
Foreign | (18,818 | ) |  | (8,257 | ) |  | (517 | )
Total deferred (benefit) | (49,317 | ) |  | (30,898 | ) |  | (2,780 | )
(Benefit from) income taxes | $ | (44,413 | ) |  | $ | (22,160 | ) |  | $ | (12,313 | )
A reconciliation of the provision for income taxes, with the amount computed by applying the statutory Federal income tax rate to (loss) income before (benefit from) income taxes is as follows:
(in thousands) | 2019 |  | 2018 |  | 2017
U.S. federal income taxes at statutory rates | $ | (28,318 | ) |  | $ | (2,424 | ) |  | $ | 30,182 |
Valuation allowance | 727 |  |  | 510 |  |  | 459 |
State income taxes, net of federal benefit and tax credits | (4,450 | ) |  | (3,329 | ) |  | (395 | )
Permanent differences | 2,606 |  |  | 1,302 |  |  | 778 |
GILTI, FDII, and BEAT | — |  |  | 399 |  |  | — |
Federal research and experimentation credits | (4,295 | ) |  | (6,991 | ) |  | (3,374 | )
Tax effects of foreign activities | 3,056 |  |  | (399 | ) |  | (781 | )
Tax-exempt income | (91 | ) |  | (137 | ) |  | (94 | )
Provision to return adjustments | (5,460 | ) |  | 253 |  |  | (1,832 | )
Non-deductible compensation | 1,716 |  |  | 1,025 |  |  | 1,840 |
Expiration of statutes and changes in estimates | 2,420 |  |  | (516 | ) |  | 257 |
Excess tax benefits related to share-based compensation | (14,291 | ) |  | (13,541 | ) |  | (24,488 | )
Impact of change in tax law | 1,908 |  |  | 1,636 |  |  | (15,450 | )
Other | 59 |  |  | 52 |  |  | 585 |
(Benefit from) income taxes | $ | (44,413 | ) |  | $ | (22,160 | ) |  | $ | (12,313 | )
Tax Reform Act On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (the “Tax Reform Act”). The Tax Reform Act makes significant changes in the U.S. tax code including the following:
• | reduction of the corporate federal income tax rate from 35% to 21%;
• | repeal of the domestic manufacturing deduction;
• | repeal of the corporate alternative minimum tax;
• | a one-time transition tax on accumulated foreign earnings (if any);
• | a move to a territorial tax system; and
• | acceleration of business asset expensing.
The Tax Reform Act provided for a one-time deemed mandatory repatriation of post-1986 undistributed foreign subsidiary earnings and profits through December 31, 2017. The Company has concluded that it is not subject to the one-time transition tax due to our foreign subsidiaries being in a net accumulated deficit position. Companies must make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as the global intangible low taxed income (“GILTI”) in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. The Company has elected to account for GILTI in the year the tax is incurred as a period cost. In 2018, the Company recognized an immaterial U.S. tax benefit resulting from the foreign derived intangible income (“FDII”) deduction. Beginning in 2019, there is no impact on the Company’s effective tax rate deriving from either the FDII,GILTI, or the base erosion and anti-abuse tax (“BEAT”) provisions. Deferred income taxes Significant components of net deferred tax assets and liabilities are:
| December 31,
(in thousands) | 2019 |  | 2018
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 70,960 |  |  | $ | 40,736 |
Accruals and reserves | 24,902 |  |  | 17,576 |
Depreciation | 2,493 |  |  | 2,874 |
Tax credit carryforwards | 15,307 |  |  | 14,896 |
Other | 199 |  |  | 176 |
Total deferred tax assets | 113,861 |  |  | 76,258 |
Valuation allowances | (28,007 | ) |  | (27,954 | )
Total net deferred tax assets | 85,854 |  |  | 48,304 |
Deferred tax liabilities: |  |  |
Software revenue | (23,859 | ) |  | (36,510 | )
Intangibles | (6,103 | ) |  | (5,748 | )
Total deferred tax liabilities | (29,962 | ) |  | (42,258 | )
Deferred income taxes | $ | 55,892 |  |  | $ | 6,046 |
The Company regularly assesses the need for a valuation allowance against its deferred tax assets. In making that assessment, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more-likely-than-not that some or all of the deferred tax assets will not be realized. This determination requires significant judgment, including assumptions about future taxable income that are based on historical and projected information. There were no material changes in the valuation allowance in 2019 or 2018. At December 31, 2019, the Company’s net operating losses and credit carryforwards are:
(in thousands) | Federal |  | State
Net operating losses (1) | $ | 120,722 |  |  | $ | 3,337 |
Net operating losses due to acquisitions (1) | $ | 76,827 |  |  | $ | 778 |
Credit carryforwards (2) | $ | 8,202 |  |  | $ | 1,958 |
Credit carryforwards due to acquisitions | $ | 640 |  |  | $ | 227 |
(1) Excludes federal and state net operating losses of $60.2 million and $0.8 million, respectively, from prior acquisitions that the Company expects will expire unutilized. (2) Excludes federal and state tax credits of $0.1 million and $8.3 million, respectively, that the Company expects will expire unutilized. Carryforward losses and credits expire between 2020 and 2038, except for the 2019 federal net operating loss of $43.9 million and $1 million of state credits, which both have unlimited carryforward periods. The Company’s India subsidiary is primarily located in Special Economic Zones (“SEZs”) and is entitled to a tax holiday in India. The tax holiday reduces or eliminates income tax in India. The tax holiday in the Hyderabad SEZ is scheduled to expire in 2024. The tax holiday in the Bangalore SEZ is scheduled to expire in 2022. For 2019, 2018 and 2017, the income tax holiday reduced the Company’s provision for income taxes by $1.9 million, $1.3 million, and $1 million, respectively. Uncertain tax benefits A rollforward of the Company’s gross unrecognized tax benefits is:
(in thousands) | 2019 |  | 2018 |  | 2017
Balance as of January 1, | $ | 18,157 |  |  | $ | 19,150 |  |  | $ | 22,671 |
Additions based on tax positions related to the current year | 510 |  |  | 978 |  |  | 452 |
Additions for tax positions of prior years | 4,917 |  |  | 174 |  |  | 238 |
Additions for acquired uncertain tax benefits | — |  |  | — |  |  | — |
Reductions for change in U.S. federal tax rate | — |  |  | — |  |  | (2,424 | )
Reductions for tax positions of prior years | (313 | ) |  | (2,145 | ) |  | (1,500 | )
Reductions for a lapse of the applicable statute of limitations | — |  |  | — |  |  | (287 | )
Balance as of December 31, | $ | 23,271 |  |  | $ | 18,157 |  |  | $ | 19,150 |
As of December 31, 2019, the Company had approximately $23.3 million of total unrecognized tax benefits, which would decrease the Company’s effective tax rate if recognized. The Company expects that the changes in the unrecognized benefits within the next twelve months will be approximately $0.1 million due to an anticipated settlement with tax authorities. Income Tax Receivable As of December 31, 2019 and December 31, 2018, the Company’s income tax receivable was $25.9 million and $27.8 million, respectively. Tax examinations The Company files federal and state income tax returns in the U.S. as well as in various foreign jurisdictions. In the ordinary course of business, the Company and its subsidiaries are examined by various tax authorities, including the Internal Revenue Service in the U.S. As of December 31, 2019, the Company’s U.S. federal tax returns for the years 2014 through 2016 were under examination by the Internal Revenue Service. In addition, certain foreign jurisdictions are auditing the Company’s income tax returns for periods ranging from 2010 through 2017. The Company does not expect the results of these audits to have a material effect on the Company’s financial condition, results of operations, or cash flows. With few exceptions, the statute of limitations remains open in all jurisdictions for the tax years 2014 to the present.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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