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Income Taxes

9 Months Ended

Sep. 30, 2020

Note 9 — Income Taxes

Income taxes are estimated for each of the jurisdictions in which the Company operates. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as the tax effect of carryforwards. Realization of net deferred tax assets is dependent on future taxable income. At September 30, 2020, the Company’s U.S. deferred tax assets are fully offset by a valuation allowance since the Company cannot conclude that it is more likely than not that these future benefits will be realized.

At the end of each interim reporting period, the effective tax rate is aligned with expectations for the full year. This estimate is used to determine the income tax provision on a year-to-date basis and may change in subsequent interim periods.

Income (loss) before income taxes and income tax expense (benefit) for the three and nine months ended September 30, 2020 and 2019 were as follows:


	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019

	(in thousands)
Income (loss) before income taxes	$	791	$	(11,695)	$	(7,760)	$	(45,455)
Income tax expense (benefit)	$	211	$	72	$	530	$	407

The Company’s tax expense for the three months ended September 30, 2020 was $0.2 million compared to $0.1 million for the comparable prior period. The 2020 tax expense included a $0.2 million expense related to the Company’s non-U.S. operations and minimal expense related to the Company’s domestic operations, compared to 2019 when the expense included a $0.1 million expense related to the Company’s domestic operations and minimal expense related to the Company’s non-U.S. operations.

The Company’s tax expense for the nine months ended September 30, 2020 was $0.5 million, compared to $0.4 million for the comparable prior period. The 2020 tax expense included a $0.2 million expense related to the Company’s domestic operations and a $0.3 million expense related to the Company’s non-U.S. operations, compared to 2019 when the expense included a $0.2 million expense related to domestic operations and a $0.2 million expense related to non-U.S. operations. Although there was a domestic pre-tax loss for the nine months ended September 30, 2020 and 2019, Veeco did not provide a current tax benefit on domestic pre-tax losses as the amounts are not realizable on a more-likely-than-not basis. The current period domestic tax expense is primarily attributable to the tax amortization of indefinite-lived intangible assets that is not available to offset U.S. deferred tax assets. The non-U.S. tax expense for the nine months ended September 30, 2020 is primarily attributable to tax expense on non-U.S. operation profits and foreign

withholding taxes on unremitted earnings as of September 30, 2020, offset by a tax benefit related to the amortization of intangible assets.

- 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.

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