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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The components of income before income taxes are as follows:
| Year Ended December 31,
| 2018 |  | 2017 |  | 2016
Domestic | $ | 46,542 |  |  | $ | 29,792 |  |  | $ | 19,874 |
Foreign | (4,152 | ) |  | (1,075 | ) |  | (3,507 | )
Income before (benefit) provision for income taxes | $ | 42,390 |  |  | $ | 28,717 |  |  | $ | 16,367 |
The components of the (benefit) provision for income taxes are as follows:
| Year Ended December 31,
| 2018 |  | 2017 |  | 2016
Current: |  |  |  |  |  |  |  |
Federal | $ | (1,888 | ) |  | $ | (1,055 | ) |  | $ | 1,304 |
State | 1,176 |  |  | 671 |  |  | 303 |
Foreign | 30 |  |  | 161 |  |  | (106 | )
| (682 | ) |  | (223 | ) |  | 1,501 |
Deferred: |  |  |  |  |  |  |  |
Federal | 2,662 |  |  | (6,683 | ) |  | 2,341 |
State | 2,530 |  |  | 1,853 |  |  | 106 |
Foreign | 303 |  |  | 262 |  |  | 422 |
| 5,495 |  |  | (4,568 | ) |  | 2,869 |
| $ | 4,813 |  |  | $ | (4,791 | ) |  | $ | 4,370 |
The Company’s deferred tax assets and liabilities result primarily from temporary differences between financial reporting and tax recognition of depreciation, energy efficiency and NOL carryforwards. Deferred tax assets and liabilities consist of the following:
| December 31,
| 2018 |  | 2017
Deferred tax assets: |  |  |  |  |
Compensation accruals | $ | 3,489 |  |  | $ | 3,042 |
Reserves | 2,940 |  |  | 2,149 |
Other | 127 |  |  | — |
Net operating losses | 10,010 |  |  | 10,099 |
Interest rate swaps | 666 |  |  | 866 |
Energy efficiency | 28,911 |  |  | 22,716 |
Interest limitation | 3,292 |  |  | — |
Deferred revenue | 1,943 |  |  | 815 |
Gross deferred income tax assets | 51,378 |  |  | 39,687 |
Valuation allowance | (7,931 | ) |  | (7,534 | )
Total deferred income tax assets | $ | 43,447 |  |  | $ | 32,153 |
Deferred tax liabilities: |  |  |  |  |
Depreciation | $ | (37,107 | ) |  | $ | (24,178 | )
Deferred effect of derivative liability and ASU 2016-09 adoption | (475 | ) |  | — |
Canadian capital cost, allowance and amortization | (1,974 | ) |  | (3,156 | )
United Kingdom goodwill amortization | (755 | ) |  | (802 | )
Outside basis difference | (7,488 | ) |  | (4,408 | )
Other | — |  |  | (193 | )
Total deferred income tax liabilities | (47,799 | ) |  | (32,737 | )
Deferred income tax liabilities, net | $ | (4,352 | ) |  | $ | (584 | )
The Company recorded a valuation allowance in the amount of $7,931 and $7,534 as of December 31, 2018 and 2017, respectively, related to the following items: 1) The Company recorded a valuation allowance on a deferred tax asset relating to interest rate swaps in the amount of $184 and $401 as of December 31, 2018 and 2017, respectively. The deferred tax asset represents a future capital loss which can only be recognized for income tax purposes to the extent of capital gain income. Although the Company anticipates sufficient future taxable income, it is more likely than not that it will not be of the appropriate character to allow for the recognition of the future capital loss. 2) As of December 31, 2018 and 2017, the Company recorded a valuation allowance on a deferred tax asset relating to a foreign net operating loss in the amount of $7,500 and $6,871, respectively. It is more likely than not that the Company will not generate sufficient taxable income at the foreign subsidiary level to utilize the net operating loss. 3) The Company recorded a valuation allowance on a deferred tax asset relating to a state net operating loss of $247 and $262 at one of its subsidiaries as of December 31, 2018 and 2017, respectively. It is more likely than not that the Company will not generate sufficient taxable income at the subsidiary level to utilize the net operating loss. The provision for income taxes is based on the various rates set by federal and local authorities and is affected by permanent and temporary differences between financial accounting and tax reporting requirements. The following is a reconciliation of the effective tax rates:
| Year Ended December 31,
| 2018 |  | 2017 |  | 2016
Income before (benefit) provision for income taxes | $ | 42,390 |  |  | $ | 28,717 |  |  | $ | 16,367 |
Federal statutory tax expense | $ | 8,902 |  |  | $ | 10,048 |  |  | $ | 5,728 |
State income taxes, net of Federal benefit | 3,071 |  |  | 1,584 |  |  | 678 |
Net state impact of deferred rate change | 174 |  |  | 327 |  |  | (110 | )
Non deductible expenses | 982 |  |  | 1,473 |  |  | 670 |
Impact of reserve for uncertain tax positions | 879 |  |  | 42 |  |  | (411 | )
Stock-based compensation expense | (441 | ) |  | 116 |  |  | 306 |
Energy efficiency preferences | (8,636 | ) |  | (6,416 | ) |  | (4,130 | )
Foreign items and rate differential | (41 | ) |  | 139 |  |  | 516 |
Tax rate change | — |  |  | (13,948 | ) |  | — |
Valuation allowance | 641 |  |  | 424 |  |  | 213 |
Miscellaneous | (718 | ) |  | 1,420 |  |  | 910 |
| $ | 4,813 |  |  | $ | (4,791 | ) |  | $ | 4,370 |
Effective tax rate: |  |  |  |  |  |  |
Federal statutory rate expense | 21.0 | % |  | 35.0 | % |  | 35.0 | %
State income taxes, net of Federal benefit | 7.2 | % |  | 5.5 | % |  | 4.1 | %
Net state impact of deferred rate change | 0.4 | % |  | 1.1 | % |  | (0.7 | )%
Non deductible expenses | 2.3 | % |  | 5.1 | % |  | 4.1 | %
Impact of reserve for uncertain tax positions | 2.1 | % |  | 0.1 | % |  | (2.5 | )%
Stock-based compensation expense | (1.0 | )% |  | 0.4 | % |  | 1.9 | %
Energy efficiency preferences | (20.4 | )% |  | (22.3 | )% |  | (25.2 | )%
Foreign items and rate differential | (0.1 | )% |  | 0.5 | % |  | 3.2 | %
Tax rate change | — | % |  | (48.6 | )% |  | — | %
Valuation allowance | 1.5 | % |  | 1.5 | % |  | 1.3 | %
Miscellaneous | (1.6 | )% |  | 4.9 | % |  | 5.5 | %
| 11.4 | % |  | (16.7 | )% |  | 26.7 | %
A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:
| Year Ended December 31,
| 2018 |  | 2017
Balance, beginning of year | $ | 600 |  |  | $ | 600 |
Additions for current year tax positions | 300 |  |  |
Additions for prior year tax positions | 900 |  |  | — |
Settlements paid to tax authorities | — |  |  | — |
Reductions of prior year tax positions | (200 | ) |  | — |
Balance, end of year | $ | 1,600 |  |  | $ | 600 |
At December 31, 2018 and 2017, the Company had approximately $1,600 and $600, respectively, of total gross unrecognized tax benefits. Of the total gross unrecognized tax benefits as of December 31, 2018 and 2017, $705 and $80, respectively, (both net of the federal benefit on state amounts) represent the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in any future periods. At December 31, 2018 the Company had a federal net operating loss carryforwards of approximately $7,200 which has an indefinite life, state net operating loss carryforwards of approximately $23,340, which will expire from 2018 through 2034 and an interest deduction carryforward of approximately $12,300 which has an indefinite life. At December 31, 2018 the Company had Canadian net operating loss carryforwards of approximately $25,000, which will expire for tax years 2018 through 2028. The Company does not accrue U.S. tax for foreign earnings that it considers to be permanently reinvested outside the United States. Consequently, the Company has not provided any withholding tax on the unremitted earnings of its foreign subsidiaries. As of December 31, 2018, the amount of earnings for which no repatriation tax has been provided is estimated to be $0. At December 31, 2018 the company had a federal tax credit carryforward of approximately $28,300 which will expire at various times through 2038. The tax years 2015 through 2018 remain open to examination by major taxing jurisdictions. The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for federal and state income taxes. The (decrease) increase included in tax expense for the years end December 31, 2018, 2017 and 2016 were $(50), $(60) and $(20), respectively. The 2017 Tax Cuts and Jobs Act (the “2017 Tax Act”) was signed into law on December 22, 2017and was effective for tax years beginning after December 31, 2017. The 2017 Tax Act significantly revised the U.S. corporate income tax by, among other things, lowering the statutory corporate tax rate from 35% to 21%, eliminating certain deductions, imposing a mandatory one-time tax on accumulated earnings of foreign subsidiaries as of December 31, 2017, introducing new tax regimes, and changing how foreign earnings are subject to U.S. tax. The 2017 Tax Act also enhanced and extended through 2026 the option to claim accelerated depreciation deductions on qualified property and created limitations on the deductibility and timing of interest deductions. The Company recorded a tax benefit for the impact of the 2017 Tax Act of approximately $13,900, in its consolidated financial statements for the year ending December 31, 2017. This amount was primarily comprised of the remeasurement of federal net deferred tax liabilities resulting from the permanent reduction in the U.S. statutory corporate tax rate from 35% to 21%. The Tax 2017 Tax Act provided for a one-time deemed mandatory repatriation for post-1986 undistributed foreign subsidiary earnings and profits (“E&P”) through the year ended December 31, 2017. The Company’s initial estimate showed a deficit in foreign E&P and significant foreign taxes paid, which could be creditable against any tax resulting from the deemed mandatory repatriation. During 2018 the Company concluded that it’s foreign E&P were in a deficit position and the Company had no tax due in connection with the deemed mandatory repatriation. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Legislation. The Company recognized the provisional tax impacts related to the revaluation of deferred tax assets and liabilities and included these amounts in its consolidated financial statements for the year ended December 31, 2017. As of December 31, 2018 the Company has finalized it’s accounting for the 2017 Tax Act with no material adjustments and all the impacts are reflected in the consolidated financial statements as of that date. In February 2018, as part of the Bipartisan Budget Act, Code Section 179D Commercial Buildings Energy Efficiency Tax Deduction was retroactively extended through December 31, 2017. Because of the timing of the retroactive extension the impact was not reflected in the Company’s effective tax rate for 2017 but was included as a tax benefit in the Company’s tax provision for the year ending December 31, 2018.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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