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Income Taxes | 12 Months Ended
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Dec. 31, 2015
Income Tax Disclosure [Abstract] |
Income Taxes | 9. Income Taxes The components of current and deferred income tax expense included in the Consolidated Statement of Operations for years ended December 31, 2015, 2014 and 2013 as determined in accordance with ASC 740, Income Taxes (“ASC 740”), are as follows:
|  | Year Ended December 31, |
|  | 2015 |  |  | 2014 |  |  | 2013 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 1,598 |  |  | $ | — |  |  | $ | — |
State and local |  |  | 2,431 |  |  |  | 94 |  |  |  | — |
Foreign |  |  | 210 |  |  |  | — |  |  |  | — |
|  |  | 4,239 |  |  |  | 94 |  |  |  | — |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 46,784 |  |  |  | 10,739 |  |  |  | — |
State and local |  |  | 6,233 |  |  |  | 1,664 |  |  |  | — |
Foreign |  |  | (123 | ) |  |  | — |  |  |  | — |
|  |  | 52,894 |  |  |  | 12,403 |  |  |  | — |
Income tax expense from operations |  | $ | 57,133 |  |  | $ | 12,497 |  |  | $ | — |
The Company has recorded its non-income based taxes as part of other liabilities and other expenses. Net operating losses – U.S. The Company has generated net operating losses for tax purposes (“NOLs”) during the year ended December 31, 2013 and prior periods which may be used to minimize income taxes. The following table provides a summary of the NOL activity for the years indicated:
|  | Year Ended December 31, |
|  | 2015 |  |  | 2014 |  |  | 2013 |
Beginning NOLs |  | $ | (109,839 | ) |  | $ | (140,959 | ) |  | $ | (136,515 | )
2014 return to provision adjustment |  |  | 3,906 |  |  |  | — |  |  |  | — |
U.S. GAAP income |  |  | 143,665 |  |  |  | 77,609 |  |  |  | 51,537 |
Tax differences: |  |  |  |  |  |  |  |  |  |  |  |
Temporary |  |  | 11,804 |  |  |  | (1,425 | ) |  |  | 5,580 |
Permanent |  |  | (73,175 | ) |  |  | (45,064 | ) |  |  | (61,561 | )
State taxes |  |  | (2,431 | ) |  |  | — |  |  |  | — |
Ending NOLs |  | $ | (26,070 | ) |  | $ | (109,839 | ) |  | $ | (140,959 | )
Temporary differences are primarily comprised of the timing difference between recognizing expenses for tax purposes and U.S. GAAP purposes associated with rent, stock-based compensation, accrued compensation and depreciation of fixed assets. Permanent differences are primarily comprised of the difference between stock-based compensation amounts recognized for tax purposes, and previously expensed at the date of grant for U.S. GAAP purposes, at the time options are exercised (at the intrinsic value) or restricted stock is vested (at fair value of the share price). The Company may record additional NOLs from stock-based compensation awards which have been granted to employees and remain unexercised or unvested as of December 31, 2015. See Note 6 for additional details related to outstanding stock compensation awards. The Company’s NOLs generally expire 20 years from the time they are generated. In addition, due to the Company incurring a series of changes in ownership as defined by Section 382 under the Internal Revenue Code, the Company is limited as to the amount of NOLs it may use in a given year. Prior to the consideration of any limitations imposed due to ownership changes, the Company’s available NOLs will expire as follows:
Year Ending December 31: |
2019 |  | $ | 5,078 |
2021 |  |  | 579 |
2023 |  |  | 608 |
2024 |  |  | 1,942 |
2032 |  |  | 13,419 |
2033 |  |  | 4,444 |
|  | $ | 26,070 |
The amounts summarized above are subject to the following annual limitations as indicated by the years such NOLs were incurred:
NOLs generated between |  | Total |  |  | Annual Prospective Limitation |  |  | Amount Deemed Worthless |
1998 — 2004 |  | $ | 8,207 |  |  | $ | 524 |  |  | $ | 3,487 |
2005 — 2013 |  |  | 17,863 |  |  |  | — |  |  |  | — |
NOLs |  | $ | 26,070 |  |  | $ | 524 |  |  | $ | 3,487 |
Any NOLs not used because of the annual limitation can be used in future periods until expiration. Net operating losses – Non-U.S. During the years ended December 31, 2015 and 2014, the Company’s foreign subsidiaries generated $6,685 and $4,061 of NOLs for a total of $10,746. At December 31, 2015 and 2014, a deferred tax asset related to these NOLs has been fully offset by a valuation allowance of $2,051 and $816 respectively. Deferred tax asset As of December 31, 2015 and 2014, $17,863 and $101,108 of the NOLs has been generated from stock-based compensation amounts recognized for tax purposes at the time options are exercised (at the intrinsic value) or restricted stock is vested (at fair value of the share price) and previously expensed at the date of grant for U.S. GAAP purposes. These amounts cannot be recognized as a deferred tax asset under U.S. GAAP. Similarly, a deferred tax asset for AMT credit of $1,598 that was created in 2015 also cannot be recognized. A reconciliation of the NOLs presented above and the amount utilized in calculating the deferred tax asset at December 31, 2015 and 2014, respectively, is as follows:
|  | December 31, |
|  | 2015 |  |  | 2014 |
NOLs |  | $ | 26,070 |  |  | $ | 109,839 |
NOLs deemed worthless |  |  | (3,487 | ) |  |  | (3,487 | )
Unrecognized stock-based compensation |  |  | (17,863 | ) |  |  | (101,108 | )
Gross NOLs available for deferred tax asset |  |  | 4,720 |  |  |  | 5,244 |
Tax rate |  |  | 38.74 | % |  |  | 38.38 | %
Tax affected |  | $ | 1,828 |  |  | $ | 2,013 |
At December 31, 2015 and 2014, the composition of the deferred tax asset is summarized as follows:
|  | December 31, |
|  | 2015 |  |  | 2014 |
Deferred tax assets: |  |  |  |  |  |  |  |
NOLs |  | $ | 1,828 |  |  | $ | 2,013 |
Foreign NOLs |  |  | 2,051 |  |  |  | 816 |
Stock-based compensation |  |  | 4,868 |  |  |  | 6,046 |
Accrued expenses |  |  | 10,197 |  |  |  | 5,236 |
Deferred rent liability |  |  | 2,116 |  |  |  | 2,170 |
Other |  |  | 82 |  |  |  | 82 |
Deferred tax assets |  |  | 21,142 |  |  |  | 16,363 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Incentive compensation |  |  | 2,753 |  |  |  | 4,092 |
Fixed assets |  |  | 2,272 |  |  |  | 1,965 |
Unrealized gains |  |  | (5 | ) |  |  | — |
Deferred tax liabilities |  |  | 5,020 |  |  |  | 6,057 |
Total deferred tax assets less deferred tax liabilities |  |  | 16,122 |  |  |  | 10,306 |
Less: valuation allowance |  |  | (2,051 | ) |  |  | (816 | )
Net deferred tax assets and liabilities |  | $ | 14,071 |  |  | $ | 9,490 |
During the first quarter of 2014, management determined that although realization is not assured, it believed that it is more likely than not that its gross deferred tax asset would be realized. Therefore, it released the valuation allowance previously recorded resulting in an income tax benefit of $21,221 on the Company’s Consolidated Statements of Operations. At December 31, 2015 and 2014, the Company generated foreign losses resulting in a deferred tax asset of $2,051 and $816, respectively, that is currently not expected to be realized in the foreseeable future and, accordingly, a valuation allowance was established. During the third quarter of 2014, the Company completed a state income tax study, which resulted in a reduction in its baseline operating tax rate in the U.S. from 45% to approximately 38%. The Company recorded a charge to income tax expense in the third quarter to reduce the value of its deferred tax asset, which had previously been recorded using a 45% rate. The Company recorded a credit to additional paid-in capital of $21,893 for the amount of NOLs from stock-based compensation utilized to reduce taxes payable during the period. A reconciliation of the statutory federal income tax rate of 35% and the Company’s effective rate is as follows:
|  | December 31, |
|  | 2015 |  |  | 2014 |  |  | 2013 |
Federal statutory rate |  |  | 35.00 | % |  |  | 35.00 | % |  |  | 35.00 | %
Permanent differences |  |  | 0.69 | % |  |  | 0.69 | % |  |  | 0.09 | %
State income tax rate, net of federal benefit |  |  | 4.11 | % |  |  | 1.55 | % |  |  | 10.06 | %
Foreign tax differential |  |  | 0.82 | % |  |  | 0.82 | % |  |  | — |
Change in valuation allowance |  |  | 0.90 | % |  |  | (27.74 | %) |  |  | (45.13 | %)
Change in effective state rate |  |  | (0.06 | %) |  |  | 6.86 | % |  |  | — |
Other differences, net |  |  | 0.19 | % |  |  | (0.19 | %) |  |  | (0.02 | %)
Effective rate |  |  | 41.65 | % |  |  | 16.99 | % |  |  | 0.00 | %
Uncertain tax positions As of December 31, 2015, the Company determined that it has no uncertain tax positions, interest or penalties as defined within ASC 740-10. The Company does not have unrecognized tax benefits. The Company does not believe that it is reasonably possible that the total unrecognized benefits will significantly increase within the next 12 months. The Company is not currently under audit by any taxing authority. Tax returns filed with each jurisdiction remain open to examination under the normal three-year statute of limitations. APB 23 – Accounting for Income Taxes The Company recognizes deferred tax liabilities associated with outside basis differences on investments in foreign subsidiaries unless the difference is considered essentially permanent in duration. As of December 31, 2015, the Company has not recorded any deferred taxes on approximately $117 of undistributed earnings and profits as they are considered permanently reinvested. In addition, foreign tax credits will likely be available to eliminate a substantial portion of any future tax from distributions of these foreign earnings. As of December 31, 2015, the determination of the unrecorded deferred tax liability related to these earnings is not practicable. If circumstances change in the foreseeable future and it becomes apparent that some or all of the undistributed earnings will not be reinvested indefinitely, or will be remitted in the foreseeable future, an additional deferred tax liability will be recorded for some or all of the outside basis difference.

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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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