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Income Taxes | 9 Months Ended
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Sep. 30, 2015
Income Taxes | 12. Income Taxes For the three- and nine-month periods ended September 30, 2015, the Company had income before taxes of $3,679,000 and $12,229,000, respectively. The Company recorded income tax provisions of $1,141,000 and $3,149,000, respectively, for the three- and nine-month periods ended September 30, 2015. This resulted in effective tax rates of 31.0% and 25.8% for the three- and nine-month periods ended September 30, 2015. The Company expects its effective tax rate for all of 2015 will be 24.3% based on currently forecasted rates of profitability in the countries in which the Company conducts business. The difference between the effective tax rate at Q3 of 24.3% and the estimated annual effective tax rate for 2015 of 22.01% is due primarily to a discrete tax charge related to historic tax uncertainties recorded in 2015 as well as the jurisdictional mix of earnings. The effective tax rate differs from the U.S. statutory tax rate primarily due to the lower statutory tax rate in Sweden. For the three and nine-month periods ended September 30, 2014, the Company had income before taxes of $2,254,000 and $10,896,000, respectively. The Company recorded income tax provisions of $788,000 and $2,327,000, respectively, for the three and nine-month periods ended September 30, 2014. This is based on a year to date effective tax rate of 21.4% for the nine-month period ended September 30, 2014 and an effective tax rate of 22.1% for the year ending December 31, 2014. The anticipated movement in the effective tax rate between the interim period and year end is a result of the expected change in the income position in the US. The effective income tax rate is based upon the estimated income for the year and the composition of the income in different jurisdictions. The effective tax rate differs from the U.S. statutory tax rate primarily due to the lower statutory tax rate in Sweden, as well as year-to-date income for the U.S. entity as compared to a projected loss in the U.S. for the full year. The Company has net operating loss carryforwards of approximately $43,387,000 and business tax credits carryforwards of approximately $1,782,000 available to reduce future federal income taxes, if any. The net operating loss and business tax credits carryforwards will continue to expire at various dates through December 2032. Net operating loss carryforwards and available tax credits are subject to review and possible adjustment by the Internal Revenue Service and may be limited in the event of certain changes in the ownership interest of significant stockholders. As of December 31, 2014, the Company concluded that realization of deferred tax assets beyond December 31, 2014 is not more likely than not, and as such, as of December 31, 2014 it maintained a valuation allowance against the majority of its remaining deferred tax assets. As of September 30, 2015, the Company concluded that realization of deferred tax assets beyond September 30, 2015 is not more likely than not, and as such, as of September 30, 2015 it maintained a valuation allowance against the majority of its remaining deferred tax assets. The fiscal years ended March 31, 2007 through March 31, 2011 as well as the nine-month fiscal year ended December 31, 2011 and the years ended December 31, 2012, 2013 and 2014 are subject to examination by the Commonwealth of Massachusetts (“the Commonwealth”) taxing authorities. Fiscal years ended December 31, 2012, 2013 and 2014 are subject to examination by other states, U.S. federal and Sweden taxing authorities. The Company is currently subject to an examination by the Commonwealth for the years 2008 and 2009. The examiner completed the exam in 2013 and issued a notice of intent to assess tax, which the Company has appealed. The two primary issues raised in the exam are the treatment of R&D credits and the sourcing of certain income streams. During the appeal stage, the Company and the state each have made settlement proposals. As of September 30, 2015 there has been no firm agreement regarding the settlement; however, based on the direction of the negotiation, the Company has increased its uncertain tax positions by $201,000 during the three-month period ended September 30, 2015. For the years ended March 31, 2010 and 2011, as well as the nine months ended December 31, 2011, the Commonwealth indicated that it was seeking to disallow certain Research and Development Credits that were generated between 2010 and 2011. The Company performed an evaluation of the available documentation, the likelihood of similar matters in other open audit periods, the impact of interest and penalties and other relevant factors and paid approximately $141,000 to the Commonwealth in July 2015. The amount paid was previously accrued by the Company. The following is a tabular reconciliation of unrecognized tax benefits (in thousands):
Unrecognized tax benefits at December 31, 2014 |  | $ | 2,081 |
Gross increases – tax positions in current period |  |  | 229 |
Gross decreases – tax positions in prior period |  |  | (125 | )
Settlements |  |  | (141 | )
Unrecognized tax benefits at September 30, 2015 |  | $ | 2,044 |

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 + Details
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