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Income Taxes | 12 Months Ended
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Jul. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Note 19—Income Taxes The components of income before income taxes are as follows: Components of Income Before Income Taxes
Year ended July 31 (in thousands) |  | 2022 |  |  | 2021 |  |  | 2020 |
Domestic |  | $ | 25,025 |  |  | $ | 60,969 |  |  | $ | 13,380 |
Foreign |  |  | 9,858 |  |  |  | 4,255 |  |  |  | 4,338 |
INCOME BEFORE INCOME TAXES |  | $ | 34,883 |  |  | $ | 65,224 |  |  | $ | 17,718 |
Significant components of the Company’s deferred income tax assets consist of the following: Significant Components of Deferred Income Taxes
July 31 (in thousands) |  | 2022 |  |  | 2021 |
Deferred income tax assets: |  |  |  |  |  |  |  |
Bad debt reserve |  | $ | 959 |  |  | $ | 1,011 |
Accrued expenses |  |  | 3,570 |  |  |  | 3,456 |
Stock options and restricted stock |  |  | 42 |  |  |  | 980 |
Charitable contributions |  |  | 730 |  |  |  | 778 |
Depreciation |  |  | (640 | ) |  |  | (373 | )
Unrealized gain |  |  | 2,895 |  |  |  | (1,826 | )
Net operating loss |  |  | 40,733 |  |  |  | 49,368 |
Deferred revenue |  |  | — |  |  |  | (352 | )
Total deferred income tax assets |  |  | 48,289 |  |  |  | 53,042 |
Valuation allowance |  |  | (11,588 | ) |  |  | (11,540 | )
NET DEFERRED INCOME TAX ASSETS |  | $ | 36,701 |  |  | $ | 41,502 |
The (provision for) benefit from income taxes consist of the following: Schedule of (Provision for) Benefits from Income Taxes
Year ended July 31 (in thousands) |  | 2022 |  |  | 2021 |  |  | 2020 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (45 | ) |  | $ | — |  |  | $ | — |
State and local |  |  | (863 | ) |  |  | (512 | ) |  |  | (46 | )
Foreign |  |  | (729 | ) |  |  | (811 | ) |  |  | (177 | )
Current |  |  | (1,637 | ) |  |  | (1,323 | ) |  |  | (223 | )
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (2,596 | ) |  |  | 26,408 |  |  |  | 8,345 |
State and local |  |  | (19 | ) |  |  | (57 | ) |  |  | 12 |
Foreign |  |  | (1,626 | ) |  |  | 6,639 |  |  |  | (4,434 | )
Deferred |  |  | (4,241 | ) |  |  | 32,990 |  |  |  | 3,923 |
(PROVISION FOR) BENEFIT FROM INCOME TAXES |  | $ | (5,878 | ) |  | $ | 31,667 |  |  | $ | 3,700 |
IDT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) The differences between income taxes expected at the U.S. federal statutory income tax rate and income taxes provided are as follows: Schedule of Differences Between Income Taxes Expected Federal Statutory Income Taxes
Year ended July 31 (in thousands) |  | 2022 |  |  | 2021 |  |  | 2020 |
U.S. federal income tax at statutory rate |  | $ | (7,325 | ) |  | $ | (13,697 | ) |  | $ | (3,721 | )
Valuation allowance |  |  | 1,147 |  |  |  | 47,862 |  |  |  | 15,470 |
Foreign tax rate differential |  |  | (1,059 | ) |  |  | (190 | ) |  |  | (3,702 | )
Nondeductible expenses |  |  | 2,044 |  |  |  | (636 | ) |  |  | (813 | )
Other |  |  | 1 |  |  |  | 299 |  |  |  | 88 |
Foreign restructuring |  |  | — |  |  |  | (1,510 | ) |  |  | (3,266 | )
State and local income tax, net of federal benefit |  |  | (686 | ) |  |  | (461 | ) |  |  | (356 | )
(PROVISION FOR) BENEFIT FROM INCOME TAXES |  | $ | (5,878 | ) |  | $ | 31,667 |  |  | $ | 3,700 |
The Company’s cumulative undistributed foreign earnings are included in accumulated deficit in the Company’s consolidated balance sheets and consisted of approximately $297 million at July 31, 2022. The Company has concluded that the earnings remain permanently reinvested. At July 31, 2022, the Company had U.S. federal net operating loss carryforwards of approximately $100 million. These loss carryforwards are available to offset future U.S. federal taxable income. U.S. federal net operating loss carryforwards of $97 million expire in fiscal 2027 through fiscal 2038, and $3 million do not expire. The Company has foreign net operating loss carryforwards of approximately $75 million, of which approximately $63 million does not expire, approximately $11 million expires in two to ten years and approximately $1 million expires in twenty years. These foreign loss carryforwards are available to offset future taxable income in the countries in which the losses were incurred. The Company’s subsidiary, net2phone, has additional U.S. federal net operating loss carryforwards of approximately $14 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 loss carryforwards do not include any excess benefits related to stock options or restricted stock. The change in the valuation allowance is as follows: Summary of Changes in Valuation Allowance
Year ended July 31 (in thousands) |  | Balance at beginning of year |  |  | Additions charged to costs and expenses |  |  | Deductions |  |  | Balance at end of year |
2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Reserves deducted from deferred income taxes, net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Valuation allowance |  | $ | 11,540 |  |  | $ | 48 |  |  | $ | — |  |  | $ | 11,588 |
2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Reserves deducted from deferred income taxes, net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Valuation allowance |  | $ | 58,700 |  |  | $ | 835 |  |  | $ | (47,995 | ) |  | $ | 11,540 |
2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Reserves deducted from deferred income taxes, net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Valuation allowance |  | $ | 74,170 |  |  | $ | — |  |  | $ | (15,470 | ) |  | $ | 58,700 |
In fiscal 2021, the Company released $46.5 million of its valuation allowance on the portion of the deferred income tax assets that it is more likely than not going to utilize. This release was mostly related to domestic deferred income tax assets. The Company used the framework of ASC Income Taxes (Topic 740) to determine whether the valuation allowance should be maintained or reversed. The Company considered the scheduled expiration of its net operating losses included in its deferred tax assets, projected future taxable income, and tax planning strategies in its assessment of the valuation allowance. The primary factors that resulted in the valuation allowance release were the three consecutive years of profitability in the United States and expected future profitability in both the United States and the United Kingdom that will utilize a significant portion of the net operating losses. The Company’s tax planning strategies were not a significant factor in the analysis. In fiscal 2020, due to taxable income in the United States, the Company utilized deferred tax assets and released the corresponding valuation allowance to offset income tax expense of $3.5 million. In addition, in fiscal 2020, the Company released an additional $8.4 million of the valuation allowance on the portion of the deferred tax assets that it is more likely than not going to utilize because the Company forecasted future profitability in the United States. IDT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) At July 31, 2022 and 2021, the Company did not have any unrecognized income tax benefits. There were no changes in the balance of unrecognized income tax benefits in fiscal 2022, fiscal 2021, and fiscal 2020. At July 31, 2022, the Company did not expect any changes in unrecognized income tax benefits during the next twelve months. In fiscal 2022, fiscal 2021, and fiscal 2020, the Company did not record any interest and penalties on income taxes. At July 31, 2022 and 2021, there was no accrued interest included in current income taxes payable. In September 2017, the Company, IDT DT, and certain other affiliates were certified by the New Jersey Economic Development Authority (“NJEDA”) as having met all of the requirements of the Grow New Jersey Assistance Act Tax Credit Program. The program provides for credits against a corporation’s New Jersey corporate business tax liability and that, tax credits may be sold subject to certain conditions. The tax credits are dependent on the corporation maintaining a minimum number of employees in New Jersey. The Company has applied for several years of credits. To date, only the Company’s report for its 2019 tax filing period has received an award recommendation from the NJEDA. The award recommendation was in the amount of $1.8 million and is subject to the NJEDA’s quality control and quality assurance review. The Company currently remains subject to examinations of its tax returns as follows: U.S. federal tax returns for fiscal 2019 to fiscal 2022, state and local tax returns generally for fiscal 2018 to fiscal 2022, and foreign tax returns generally for fiscal 2018 to fiscal 2022.

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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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