13.

Income Taxes

(Loss) income before income taxes for the fiscal years ended

March 31, 2021

, and

2020

are provided in the table as

follows

(in thousands):

	Fiscal years ended March 31,
	2021			2020
Income/(Loss) before income tax expense:
U.S.	$	(26,721	)	$	(18,260	)
Foreign		3,211			1,359
Total	$	(23,510	)	$	(16,901	)

The components of income tax expense (benefit) attributable to continuing operations consist of the following (in thousands):

	Fiscal years ended March 31,
	2021			2020
Current
Federal	$	191		$	1,814
Foreign		198			95
Total current		389			1,909

Deferred
Federal		(1,602	)		(1,524	)
Foreign		381			(190	)
Total deferred		(1,221	)		(1,714	)

Income tax (benefit) expense	$	(832	)	$	195

The reconciliation between the statutory federal income tax rate and the Company's effective income tax rate is shown below.

	Fiscal years ended March 31,
	2021			2020
Statutory federal income tax rate		(21	)%		(21	)%
Foreign income tax rate differential		(20	)		2
True-up of NOLs		36			1
GILTI		3			1
Other		(1	)		(6	)
Valuation allowance		(1	)		24
Effective income tax rate		(4	)%		1	%

The following is a summary of the principal components of the Company's deferred tax assets and liabilities (in thousands):

	March 31, 2021			March 31, 2020
Deferred tax assets:
Net operating loss carryforwards	$	184,455		$	195,504
Research and development and other tax credit carryforwards		13,280			13,244
Accruals and reserves		5,416			5,352
Fixed assets and intangible assets		1,414			1,697
Other		1,149			1,565
Gross deferred tax assets		205,714			217,362
Valuation allowance		(200,081	)		(199,989	)
Total deferred tax assets		5,633			17,373

Deferred tax liabilities:
Intercompany Debt		(4,205	)		(14,365	)
Other		(479	)		(1,637	)
Total deferred tax liabilities		(4,684	)		(16,002	)
Net deferred tax assets	$	949		$	1,371

March 27, 2020,

the United States enacted the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"). The CARES Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the United States economy and fund a nationwide effort to curtail the effect of COVID-

19.

While the CARES Act provides sweeping tax changes in response to the COVID-

pandemic, some of the more significant provisions include removal of certain limitations on utilization of net operating losses, increasing the loss carryback period for certain losses to

five

years, and increasing the ability to deduct interest expense, as well as amending certain provisions of the previously enacted Tax Cuts and Jobs Act of

2017.

The CARES Act is

not

expected to have a material impact on the Company's financial position, results of operations or cash flows.

The Company has provided a full valuation allowance against its net deferred income tax assets in the U.S., Romania and China since it is more likely than

not

that its deferred tax assets will

not

be realizable. After consideration of all the available evidence, both positive and negative, the Company has determined that a

$200.1

million valuation allowance at

March 31, 2021

is necessary to reduce the deferred tax assets to the amount that will more likely than

not

be realized which is a

$0.1

million increase from the

$200.0

valuation allowance as of

March 31, 2020.

March 31, 2021

, the Company had aggregate net operating loss carryforwards in the U.S. for federal and state income tax purposes of approximately

$780.5

million and

$211.1

million, respectively, which expire in the years ending

March

31,

2021

through

2040.

For U.S. federal tax purpose, approximately

$68.2

million of federal net operating losses have an indefinite carryforward period. Included in the U.S. net operating loss are

$3.7

million of acquired losses from Power Quality Systems, Inc. and

$0.3

million of acquired losses from Infinia Technology Corporation. Research and development and other tax credit carryforwards amounting to approximately

$10.6

million and

$3.0

million are available to offset federal and state income taxes, respectively, and will expire in the years ending through

2040.

March 31, 2021

, the Company had aggregate net operating loss carryforwards for its Chinese operation of approximately

$30.1

million, which can be carried forward for

five

years and begin to expire

December

31,

2021.

March 31, 2021,

AMSC Romania had aggregate net operating loss carryforwards of approximately

$0.9

million, which can be carried forward for

seven

years and begin to expire at

March 31, 2028.

Section

382

of the U.S. Internal Revenue Code of

1986,

as amended (the “IRC”), provides limits on the extent to which a corporation that has undergone an ownership change (as defined) can utilize any net operating loss ("NOL") and general business tax credit carryforwards it

may

have. The Company updated its study in

2020

to determine whether Section

382

could limit the use of its carryforwards in this manner. After completing this study, the Company has concluded that the limitation will

not

have a material impact on its ability to utilize its NOL carryforwards. If there were material ownership changes subsequent to the study, such changes could limit the Company's ability to utilize its NOL carryforwards.

The total amount of undistributed foreign earnings available to be repatriated at

March 31, 2021

was

$1.7

million resulting in the recording of a

$0.3

million deferred tax liability for foreign withholding taxes.

The Company has

not

recorded a deferred tax asset for the temporary difference associated with the excess of the tax greater than the book basis in its Chinese and Romanian subsidiaries as the future tax benefit is

not

expected to reverse in the foreseeable future.

Accounting for income taxes requires a

two

-step approach to recognizing and measuring uncertain tax positions. The

first

step is to evaluate the tax position for recognition by determining if, based on the technical merits, it is more likely than

not

that the position will be sustained upon audit, including resolution of related appeals or litigation processes, if any. The

second

step is to measure the tax benefit as the largest amount that is more than

50%

likely of being realized upon ultimate settlement. The Company reevaluates these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but

not

limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit and new audit activity. Any changes in these factors could result in the recognition of a tax benefit or an additional charge to the tax provision. The Company did

not

identify any uncertain tax positions at

March 31, 2021

. The Company did

not

have any gross unrecognized tax benefits at

March 31, 2021

2020

There were

reversals of uncertain tax positions in the fiscal years ended

March 31, 2021

and

2020

The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for federal and state income taxes. Any unrecognized tax benefits, if recognized, would favorably affect its effective tax rate in any future period. The Company does

not

expect that the amounts of unrecognized benefits will change significantly within the next

twelve

months.

The Company conducts business globally and, as a result, its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. Major tax jurisdictions include the U.S., China, Romania and Austria. All U.S. income tax filings for fiscal years ended

March

31,

1996

through

2021

remain open and subject to examination.

All fiscal years from the fiscal year ended

March 31, 2019

through

2021

remain open and subject to examination in Austria. As of

March 31, 2021

, the Company remains open to audit for the calendar years

2016

and forward in China. Tax filings in Romania for the fiscal years ended

March 31, 2016

through

2021

remain open and subject to examination.