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Note 13 - Income Taxes | 12 Months Ended
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Mar. 31, 2022
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | 13. Income Taxes (Loss) income before income taxes for the fiscal years ended March 31, 2022, and 2021 are provided in the table as follows (in thousands):
|  | Fiscal years ended March 31, |
|  | 2022 |  |  | 2021 |
Income/(Loss) before income tax expense: |  |  |  |  |  |  |  |
U.S. |  | $ | (21,639 | ) |  | $ | (26,721 | )
Foreign |  |  | 597 |  |  |  | 3,211 |
Total |  | $ | (21,042 | ) |  | $ | (23,510 | )
The components of income tax expense (benefit) attributable to continuing operations consist of the following (in thousands):
|  | Fiscal years ended March 31, |
|  | 2022 |  |  | 2021 |
Current |  |  |  |  |  |  |  |
Federal |  | $ | 252 |  |  | $ | 191 |
Foreign |  |  | 302 |  |  |  | 198 |
Total current |  |  | 554 |  |  |  | 389 |
Deferred |  |  |  |  |  |  |  |
Federal |  |  | (2,270 | ) |  |  | (1,602 | )
Foreign |  |  | (133 | ) |  |  | 381 |
Total deferred |  |  | (2,403 | ) |  |  | (1,221 | )
Income tax benefit |  | $ | (1,849 | ) |  | $ | (832 | )
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, |
|  | 2022 |  |  | 2021 |
Statutory federal income tax rate |  |  | (21 | )% |  |  | (21 | )%
State income taxes, net of federal benefit |  |  | 4 |  |  |  | — |
Foreign income tax rate differential |  |  | 1 |  |  |  | (20 | )
True-up of NOLs |  |  | 81 |  |  |  | 36 |
GILTI |  |  | 0 |  |  |  | 3 |
Other |  |  | (8 | ) |  |  | (1 | )
Valuation allowance |  |  | (66 | ) |  |  | (1 | )
Effective income tax rate |  |  | (9 | )% |  |  | (4 | )%
The following is a summary of the principal components of the Company’s deferred tax assets and liabilities (in thousands):
|  | March 31, 2022 |  |  | March 31, 2021 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 171,274 |  |  | $ | 184,455 |
Research and development and other tax credit carryforwards |  |  | 13,464 |  |  |  | 13,280 |
Accruals and reserves |  |  | 5,366 |  |  |  | 5,416 |
Fixed assets and intangible assets |  |  | 565 |  |  |  | 1,414 |
Other |  |  | 1,432 |  |  |  | 1,149 |
Gross deferred tax assets |  |  | 192,101 |  |  |  | 205,714 |
Valuation allowance |  |  | (186,618 | ) |  |  | (200,081 | )
Total deferred tax assets |  |  | 5,483 |  |  |  | 5,633 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Intercompany Debt |  |  | — |  |  |  | (4,205 | )
Amortization |  |  | (2,721 | ) |  |  | — |
Other |  |  | (1,835 | ) |  |  | (479 | )
Total deferred tax liabilities |  |  | (4,556 | ) |  |  | (4,684 | )
Net deferred tax assets |  | $ | 927 |  |  | $ | 949 |
On 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-19 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. and Romania 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 $186.6 million valuation allowance at March 31, 2022 is necessary to reduce the deferred tax assets to the amount that will more likely than not be realized which is a $13.5 million decrease from the $200.1 valuation allowance as of March 31, 2021. At March 31, 2022, the Company had aggregate net operating loss carryforwards in the U.S. for federal and state income tax purposes of approximately $755.5 million and $201.3 million, respectively, which expire in the years ending March 31, 2023 through 2040. For U.S. federal tax purpose, approximately $86.7 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 $10.9 million and $3.2 million are available to offset federal and state income taxes, respectively, and will expire in the years ending through 2040. During the year ended March 31, 2022, AMSC China was dissolved, so all deferred tax assets for AMSC China have been written off as of March 31, 2022. The Company had established a full valuation allowance against its deferred tax assets in China as the future tax benefit was not expected to reverse in the foreseeable future. As of January 1, 2022, AMSC Romania was reclassified as a micro enterprise and will be treated as a micro enterprise tax system. At March 31, 2022, AMSC Romania has 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, 2022 was $2.7 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 Romanian subsidiary 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, 2022. The Company did not have any gross unrecognized tax benefits at March 31, 2022 or 2021. There were no reversals of uncertain tax positions in the fiscal years ended March 31, 2022 and 2021. 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. and Austria. All U.S. income tax filings for fiscal years ended March 31, 1996 through 2022 remain open and subject to examination. All fiscal years from the fiscal year ended March 31, 2020 through 2022 remain open and subject to examination in Austria. Tax filings in Romania for the fiscal years ended March 31, 2017 through 2022 remain open and subject to examination.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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