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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Components of Net Income from Continuing Operations Before Income Taxes | Income Tax Provision. The components of net income before income taxes are as follows (in thousands):
|  | 2022 |  |  | 2021 |  |  | 2020 |
Domestic |  | $ | 53,251 |  |  | $ | 98,261 |  |  | $ | 77,721 |
Australia |  |  | (5,851 | ) |  |  | (3,429 | ) |  |  | (2,085 | )
India |  |  | 9,517 |  |  |  | 5,873 |  |  |  | 6,245 |
Ireland |  |  | (3,391 | ) |  |  | 1,627 |  |  |  | 874 |
United Kingdom |  |  | 2,533 |  |  |  | (5,734 | ) |  |  | (4,281 | )
Foreign other |  |  | 4,722 |  |  |  | 4,348 |  |  |  | 6,882 |
Total |  | $ | 60,781 |  |  | $ | 100,946 |  |  | $ | 85,356 |
Schedule of Components of Income Tax Expense (Benefit) | The income tax provision consists of the following (in thousands):
|  | 2022 |  |  | 2021 |  |  | 2020 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 30,012 |  |  | $ | 17,012 |  |  | $ | 17,760 |
State |  |  | 6,517 |  |  |  | 5,835 |  |  |  | 5,373 |
Australia |  |  | 55 |  |  |  | 118 |  |  |  | 40 |
India |  |  | 4,370 |  |  |  | 959 |  |  |  | 1,788 |
Ireland |  |  | 273 |  |  |  | 561 |  |  |  | 567 |
United Kingdom |  |  | 349 |  |  |  | 426 |  |  |  | 357 |
Foreign other |  |  | 2,772 |  |  |  | 1,338 |  |  |  | 2,026 |
|  |  | 44,348 |  |  |  | 26,249 |  |  |  | 27,911 |
Deferred: |  |  |  |  |  |  |  |  |
Federal |  |  | (21,962 | ) |  |  | 2,294 |  |  |  | (497 | )
State |  |  | (3,073 | ) |  |  | 344 |  |  |  | (1,031 | )
Australia |  |  | (890 | ) |  |  | (180 | ) |  |  | (424 | )
India |  |  | (1,388 | ) |  |  | 368 |  |  |  | (387 | )
Ireland |  |  | (341 | ) |  |  | (150 | ) |  |  | 331 |
United Kingdom |  |  | 469 |  |  |  | (558 | ) |  |  | 304 |
Foreign other |  |  | (442 | ) |  |  | 248 |  |  |  | 438 |
|  |  | (27,627 | ) |  |  | 2,366 |  |  |  | (1,266 | )
Total income tax provision |  | $ | 16,721 |  |  | $ | 28,615 |  |  | $ | 26,645 |
Schedule of Effective Income Tax Rate Reconciliation | The difference between our income tax provision computed at the statutory Federal income tax rate and our financial statement income tax is summarized as follows (in thousands):
|  | 2022 |  |  | 2021 |  |  | 2020 |
Provision at Federal rate of 21% |  | $ | 12,764 |  |  | $ | 21,199 |  |  | $ | 17,925 |
State income taxes, net of Federal impact |  |  | 2,079 |  |  |  | 4,882 |  |  |  | 3,430 |
Research and experimentation credits |  |  | (1,560 | ) |  |  | (2,062 | ) |  |  | (2,705 | )
Stock award vesting |  |  | (1,355 | ) |  |  | (538 | ) |  |  | (540 | )
Tax uncertainties |  |  | (227 | ) |  |  | 69 |  |  |  | (403 | )
Section 162(m) compensation limitation |  |  | 2,326 |  |  |  | 1,610 |  |  |  | 4,494 |
Foreign rate differential |  |  | 571 |  |  |  | 592 |  |  |  | 462 |
Valuation allowance for deferred tax assets |  |  | 638 |  |  |  | 1,427 |  |  |  | 1,002 |
Withholding tax |  |  | 1,948 |  |  |  | 2,305 |  |  |  | 2,572 |
Other impact of foreign operations |  |  | 422 |  |  |  | (468 | ) |  |  | 621 |
Statutory rate change |  |  | 303 |  |  |  | (299 | ) |  |  | 71 |
Convertible debt premium |  |  | (1,017 | ) |  |  | — |  |  |  | — |
Other |  |  | (171 | ) |  |  | (102 | ) |  |  | (284 | )
Total income tax provision |  | $ | 16,721 |  |  | $ | 28,615 |  |  | $ | 26,645 |
Net Deferred Income Tax Assets | Deferred Income Taxes. Net deferred income tax assets as of December 31, 2022 and 2021 are as follows (in thousands):
|  | 2022 |  |  | 2021 |
Deferred income tax assets |  | $ | 81,747 |  |  | $ | 56,065 |
Deferred income tax liabilities |  |  | (27,733 | ) |  |  | (25,250 | )
Valuation allowance |  |  | (27,925 | ) |  |  | (29,983 | )
Net deferred income tax assets |  | $ | 26,089 |  |  | $ | 832 |
The Components of Net Deferred Income Tax Assets (Liabilities) | The components of our net deferred income tax assets (liabilities) as of December 31, 2022 and 2021 are as follows (in thousands):
|  | 2022 |  |  | 2021 |
Net deferred income tax assets: |  |  |  |  |  |
Accrued expenses and reserves |  | $ | 6,206 |  |  | $ | 9,470 |
Stock-based compensation |  |  | 5,321 |  |  |  | 3,807 |
Software |  |  | (855 | ) |  |  | (1,435 | )
Client contracts and related intangibles |  |  | (9,577 | ) |  |  | (5,993 | )
Goodwill |  |  | (13,424 | ) |  |  | (11,563 | )
Net operating loss carryforwards |  |  | 27,820 |  |  |  | 31,548 |
Property and equipment |  |  | (3,789 | ) |  |  | (4,311 | )
Deferred revenue |  |  | 4,882 |  |  |  | 3,578 |
State taxes |  |  | - |  |  |  | 195 |
Contingent payments |  |  | (88 | ) |  |  | (123 | )
Foreign exchange gain/loss |  |  | 1,791 |  |  |  | 1,064 |
Operating lease right-of-use assets and lease liabilities |  |  | 5,872 |  |  |  | 1,768 |
Unrecognized tax benefit |  |  | 408 |  |  |  | 522 |
Credits and incentives |  |  | 374 |  |  |  | 397 |
R&D |  |  | 28,733 |  |  |  | 554 |
Other |  |  | 340 |  |  |  | 1,337 |
Total net deferred income tax assets |  |  | 54,014 |  |  |  | 30,815 |
Less: valuation allowance |  |  | (27,925 | ) |  |  | (29,983 | )
Net deferred income tax assets |  | $ | 26,089 |  |  | $ | 832 |
Beginning January 1, 2022, we are required to capitalize certain research and development expenditures in accordance with section 174 of the Internal Revenue Code, as amended by the Tax Cuts and Jobs Act of 2017, instead of previously being allowed to expense. Amortization of such capitalized expenditures are allowed over a 5-year period if incurred domestically or a 15-year period if incurred outside the United States. Of the total R&D related deferred income tax assets (net of applicable amortization) as of December 31, 2022, in the table above, Federal and state was $28.2 million with the remaining amount attributable to foreign R&D credits.
Reconciliation of Beginning and Ending Balances of Liability for Unrecognized Tax Benefits | A reconciliation of the beginning and ending balances of our liability for unrecognized tax benefits is as follows (in thousands):
|  | 2022 |  |  | 2021 |  |  | 2020 |
Balance, beginning of year |  | $ | 2,929 |  |  | $ | 1,393 |  |  | $ | 1,540 |
Additions related to prior acquisitions |  |  | 2 |  |  |  | 1,508 |  |  |  | 160 |
Lapse of statute of limitations |  |  | 5 |  |  |  | (151 | ) |  |  | (313 | )
Additions for tax positions of prior years |  |  | 8 |  |  |  | 36 |  |  |  | 111 |
Reductions for tax positions of prior years |  |  | (382 | ) |  |  | (62 | ) |  |  | (105 | )
Additions for tax positions of current year |  |  | — |  |  |  | 205 |  |  |  | — |
Balance, end of year |  | $ | 2,562 |  |  | $ | 2,929 |  |  | $ | 1,393 |

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