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Income Taxes | 3 Months Ended
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Mar. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes |
1 3. | Income Taxes
Historically, the Company has elected to be taxed under the provisions of Subchapter ”S” of the Internal Revenue Code for federal tax purposes. As a result, income has not been subject to U.S. federal income taxes or state income taxes in those states where the ”S” Corporation status is recognized. No provision or liability for federal or state income tax has been provided in the consolidated financial statements except for those states where the ”S” Corporation status is not recognized and for the 1.5% California franchise tax to which the Company is also subject as a California “S” Corporation. The provision for income tax in the historical periods prior to the Company’s initial public offering consists of these taxes and certain foreign taxes where the Company is subject to tax. In connection with the initial public offering on May 8, 2019, the Company’s “S” Corporation status terminated and the Company will be treated as a “C” Corporation under Subchapter C of the Internal Revenue Code. The revocation of the Company’s “S” Corporation election will have a material impact on the Company’s results of operations, financial condition and cash flows. The Company’s effective income tax rate will increase and net income will decrease since the Company will be subject to both federal and state taxes on our earnings. The termination of the “S” Corporation status will be treated as a change in tax status under ASC 740, “Income Taxes”. These rules require that the deferred tax effects of a change in tax status be recorded to income from continuing operations on the date the “S” Corporation status terminates. The Company estimates the effects of the change in tax status based upon forecasted temporary differences for the year to be approximately $55 million to $61 million. This range is subject to revision based upon actual results. As a Subchapter “S” corporation the effective tax rates for the quarters ended March 30, 2018 and March 31, 2019 were 15.54% and 12.35%, respectively. The decrease in the effective rate is principally the result of a change in the jurisdictional earnings. The US government enacted comprehensive tax legislation on December 22, 2017, which is commonly referred to as the Tax Cuts and Jobs Act ("TCJA"). The TCJA significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21% effective January 1, 2018. The TCJA also repealed the deduction for domestic production activities, limited the deductibility of certain executive compensation, and implemented a modified territorial tax system with the introduction of the Global Intangible Low-Taxed Income (“GILTI”) tax rules. The TCJA also imposes a one-time transition tax on deemed repatriation of historical earnings of foreign subsidiaries. As a Subchapter “S” corporation, the TCJA has had limited effect on our effective tax rate. However, after the Company revokes the “S” Corporation election, the Company expects to be subject to the federal and state rates, the GILTI tax rules and other changes in the rules under the TCJA. Because of the complexity of the new GILTI tax rules, and the expected change in status, the Company will continue to evaluate the impact of this provision and the application of ASC 740, Income Taxes. Under GAAP, the Company is allowed to make an accounting policy election of either (i) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the "period cost method"), or (ii) factoring such amounts into a Company's measurement of its deferred taxes (the "deferred method"). The Company has elected the period cost method. As of March 31, 2019, the Company’s deferred tax assets included a valuation allowance of $ 6.7 million primarily related to foreign net operating loss carryforwards that the Company determined were not more likely than not to be realized. The factors used to assess the likelihood of realization were the past performance of the related entities, our forecast of future taxable income, and available tax planning strategies that could be implemented to realize the deferred tax assets. The ability or failure to achieve the forecasted taxable income in these entities could affect the ultimate realization of deferred tax assets. As of December 31, 2018 and March 31, 2019, the liability for income taxes associated with uncertain tax positions was $9.9 million and $10.7 million, respectively. In the normal course of business, the Company is subject to tax audit by several jurisdictions and believes the outcomes which are reasonably possible within the next twelve months, including lapses in statutes of limitations, could result in adjustments, but will not result in a material change in the liability for uncertain tax positions.

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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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