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Income Taxes | 12 Months Ended
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Jul. 31, 2015
Income Taxes [Abstract] |
Income Taxes | Note 15—Income Taxes The components of income from continuing operations before income taxes are as follows:
Year ended July 31 (in thousands) |  | 2015 |  |  | 2014 |  |  | 2013 |
Domestic |  | $ | 7,538 |  |  | $ | 21,624 |  |  | $ | 44,355 |
Foreign |  |  | 84,665 |  |  |  | 3,368 |  |  |  | (10,405 | )
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |  | $ | 92,203 |  |  | $ | 24,992 |  |  | $ | 33,950 |
Significant components of the Company’s deferred income tax assets consist of the following:
July 31 (in thousands) |  | 2015 |  |  | 2014 |
Deferred income tax assets: |  |  |  |  |  |
Bad debt reserve |  | $ | 550 |  |  | $ | 2,188 |
Accrued expenses |  |  | 4,629 |  |  |  | 2,937 |
Stock options and restricted stock |  |  | 1,030 |  |  |  | 2,131 |
Charitable contributions |  |  | 1,277 |  |  |  | 1,230 |
Impairment |  |  | 25,746 |  |  |  | 25,745 |
Depreciation |  |  | 7,232 |  |  |  | 7,566 |
Unrealized gain |  |  | 138 |  |  |  | 163 |
Net operating loss |  |  | 125,223 |  |  |  | 126,093 |
Credits |  |  | 2,892 |  |  |  | 3,123 |
Total deferred income tax assets |  |  | 168,717 |  |  |  | 171,176 |
Valuation allowance |  |  | (155,393 | ) |  |  | (151,975 | )
DEFERRED INCOME TAX ASSETS, NET |  | $ | 13,324 |  |  | $ | 19,201 |
The provision for income taxes consists of the following:
Year ended July 31 (in thousands) |  | 2015 |  |  | 2014 |  |  | 2013 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | (279 | ) |  | $ | 671 |
State and local |  |  | — |  |  |  | — |  |  |  | 148 |
Foreign |  |  | (311 | ) |  |  | (1,177 | ) |  |  | (1,431 | )
|  |  | (311 | ) |  |  | (1,456 | ) |  |  | (612 | )
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (1,967 | ) |  |  | (6,461 | ) |  |  | (14,181 | )
State and local |  |  | (245 | ) |  |  | (175 | ) |  |  | (1,079 | )
Foreign |  |  | (3,565 | ) |  |  | 4,110 |  |  |  | — |
|  |  | (5,777 | ) |  |  | (2,526 | ) |  |  | (15,260 | )
PROVISION FOR INCOME TAXES |  | $ | (6,088 | ) |  | $ | (3,982 | ) |  | $ | (15,872 | )
In fiscal 2014, the Company determined that its valuation allowance on the losses of IDT Global, a U.K. subsidiary, were no longer required due to an internal reorganization that generated income and a projection that the income would continue. The Company recorded a benefit from income taxes of $4.1 million in fiscal 2014 from the full recognition of the IDT Global deferred tax assets. The differences between income taxes expected at the U.S. federal statutory income tax rate and income taxes provided are as follows:
Year ended July 31 (in thousands) |  | 2015 |  |  | 2014 |  |  | 2013 |
U.S. federal income tax at statutory rate |  | $ | (32,271 | ) |  | $ | (8,747 | ) |  | $ | (11,883 | )
Valuation allowance |  |  | — |  |  |  | 4,110 |  |  |  | — |
Foreign tax rate differential |  |  | 25,757 |  |  |  | 961 |  |  |  | (5,073 | )
Nondeductible expenses |  |  | 659 |  |  |  | 761 |  |  |  | 714 |
Other |  |  | (73 | ) |  |  | 7 |  |  |  | 50 |
Prior year tax (expense) benefit |  |  | — |  |  |  | (960 | ) |  |  | 921 |
State and local income tax, net of federal benefit |  |  | (160 | ) |  |  | (114 | ) |  |  | (601 | )
PROVISION FOR INCOME TAXES |  | $ | (6,088 | ) |  | $ | (3,982 | ) |  | $ | (15,872 | )
At July 31, 2015, the Company had federal and state net operating loss carryforwards of approximately $170 million. This carry-forward loss is available to offset future U.S. federal and state taxable income. The net operating loss carryforwards will start to expire in fiscal 2016, with fiscal 2015’s loss expiring in fiscal 2036. The Company has foreign net operating losses of approximately $173 million, of which approximately $117 million does not expire and approximately $56 million expires in two to nine years. These foreign net operating losses are available to offset future taxable income in the countries in which the losses were incurred. The Company’s subsidiary, Net2Phone, which provides voice over Internet protocol communications services, has additional federal net operating losses of approximately $84 million, which will expire through fiscal 2027. With the reacquisition of Net2Phone by the Company in March 2006, its losses were limited under Internal Revenue Code Section 382 to approximately $7 million per year. The net operating losses do not include any excess benefits related to stock options or restricted stock. The Company has not recorded U.S. income tax expense for foreign earnings, as such earnings are permanently reinvested outside the United States. The cumulative undistributed foreign earnings are included in accumulated deficit in the Company’s consolidated balance sheets, and consisted of approximately $353 million at July 31, 2015. Upon distribution of these foreign earnings to the Company’s domestic entities, the Company may be subject to U.S. income taxes and withholding of foreign taxes, however, it is not practicable to determine the amount, if any, which would be paid. The change in the valuation allowance is as follows:
Year ended July 31 (in thousands) |  | Balance at beginning of year |  |  | Additions charged to costs and expenses |  |  | Deductions |  |  | Balance at end of year |
2015 |  |  |  |  |  |  |  |  |  |  |  |
Reserves deducted from deferred income taxes, net: |  |  |  |  |  |  |  |  |  |  |  |
Valuation allowance |  | $ | 151,975 |  |  | $ | 3,418 |  |  | $ | — |  |  | $ | 155,393 |
2014 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Reserves deducted from deferred income taxes, net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Valuation allowance |  | $ | 167,328 |  |  | $ | — |  |  | $ | (15,353 | ) |  | $ | 151,975 |
2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Reserves deducted from deferred income taxes, net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Valuation allowance |  | $ | 204,977 |  |  | $ | 462 |  |  | $ | (38,111 | ) |  | $ | 167,328 |
The table below summarizes the change in the balance of unrecognized income tax benefits:
Year ended July 31 (in thousands) |  | 2015 |  |  | 2014 |  |  | 2013 |
Balance at beginning of year |  | $ | — |  |  | $ | 356 |  |  | $ | — |
Additions based on tax positions related to the current year |  |  | — |  |  |  | — |  |  |  | — |
Additions for tax positions of prior years |  |  | — |  |  |  | — |  |  |  | 356 |
Reductions for tax positions of prior years |  |  | — |  |  |  | — |  |  |  | — |
Settlements |  |  | — |  |  |  | (356 | ) |  |  | — |
Lapses of statutes of limitations |  |  | — |  |  |  | — |  |  |  | — |
Balance at end of year |  | $ | — |  |  | $ | — |  |  | $ | 356 |
At July 31, 2015, the Company did not have any unrecognized income tax benefits and did not expect any changes in the next twelve months. If the Company recognized any unrecognized income tax benefits, it would affect the effective tax rate. In fiscal 2015, fiscal 2014 and fiscal 2013, the Company did not record any interest and penalties on income taxes. As of July 31, 2015 and 2014, there was no accrued interest included in current income taxes payable. The Company currently remains subject to examinations of its tax returns as follows: U.S. federal tax returns for fiscal 2012 to fiscal 2015, state and local tax returns generally for fiscal 2011 to fiscal 2015 and foreign tax returns generally for fiscal 2011 to fiscal 2015.

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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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