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INCOME TAXES | 6 Months Ended
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Jul. 31, 2018
INCOME TAXES |
INCOME TAXES | NOTE 12 — INCOME TAXES The Tax Cuts and Jobs Act (the “Tax Act”) was signed into law on December 22, 2017 and significantly changes tax law in the United States by, among other items, reducing the federal corporate income tax rate from a maximum of 35% to 21% (effective January 1, 2018). The Tax Act embraces a territorial system for the taxation of future foreign earnings and modifies certain business deductions by, among other changes, repealing the domestic production activities deduction, further limiting the deductibility of certain executive compensation and increasing the limitation on the deductibility of certain meals and entertainment expenses. As a result of the reduction in the corporate income tax rate, the Company revalued its deferred taxes as of December 22, 2017 and recognized an income tax benefit of $0.8 million for the year ended January 31, 2018. The Company did not record a liability as of January 31, 2018 related to transition taxes as it did not have any unremitted foreign earnings. Its foreign operations had incurred a cumulative net operating loss since the acquisition of APC in May 2015. The Company currently estimates that the Global Intangible Low-Taxed Income (“GILTI”) provision of the Tax Act will not have a material impact on its operating results for the year ending January 31, 2019. Nonetheless, it has included GILTI tax related to current year operations in the estimated annual effective tax rate. The Company has not provided additional GILTI tax on deferred items. In the event that any new guidance related to the Tax Act is issued by the Internal Revenue Service (the “IRS”) or other regulatory or standard-setting bodies, the Company will conduct additional analysis and may make adjustments that could materially impact the Company’s income tax expense for the period in which such adjustments are made. The Company’s income tax expense amounts for the six months ended July 31, 2018 and 2017 differed from corresponding amounts computed by applying the federal corporate income tax rates of 21% and 35%, respectively, to income before income taxes for the periods as shown in the table below. Foreign income tax expense for the six months ended July 31, 2018 was $0.4 million; the comparable amount for the six months ended July 31, 2017 was not material.
|  | Six Months Ended July 31, |
|  | 2018 |  | 2017 |
Computed expected income tax expense |  | $ | 6,266 |  | $ | 25,810 |
Increase (decrease) resulting from: |  |  |  |  |
State income taxes, net of federal tax benefit |  | 1,176 |  | 3,020 |
Domestic production activities deduction |  | — |  | (2,148 | )
Stock options |  | (5 | ) | (773 | )
Adjustments and other differences |  | 614 |  | (233 | )
|  | $ | 8,051 |  | $ | 25,676 |
As of July 31, and January 31, 2018, the condensed consolidated balance sheets included prepaid income taxes in the amounts of approximately $3.2 million and $7.9 million, respectively. As of July 31, 2018, the Company does not believe that it has any material uncertain income tax positions reflected in its accounts. The Company is subject to income taxes in the United States, the Republic of Ireland, the United Kingdom and various other state and foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The Company is no longer subject to income tax examinations by tax authorities for its fiscal years ended on or before January 31, 2014 except for several notable exceptions including the Republic of Ireland, the United Kingdom and several states where the open periods are one year longer. The IRS is conducting an examination of the Company’s federal consolidated tax return for the year ended January 31, 2016. At this time, the Company does not have reason to expect any material changes to its income taxes resulting from the outcome of this examination. The Company has continued to review the activities of its engineering staff in order to identify and quantify the amounts of research and development credits that may be available to reduce current and prior year income taxes. This study was begun last year and has not been completed. Accordingly, no benefits related to research and development credits, which could be material, have been reflected in the amounts of income tax expense recorded by the Company for the current or any prior year reporting period.

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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 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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