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Income Taxes

12 Months Ended

Dec. 31, 2022

Income Taxes

Income Taxes

Note 15 — Income Taxes

​

The amounts of income (loss) before income taxes attributable to domestic and foreign operations were as follows:

​

​	​	​	​	​	​	​	​	​	​
​	​	Year ended December 31,
​		2022			2021			2020
​	​	(in thousands)
Domestic	​	$	47,368	​	$	23,561	​	$	(10,292)
Foreign	​		3,617	​		2,119	​		1,828
Total	​	$	50,985	​	$	25,680	​	$	(8,464)

​

Significant components of the expense (benefit) for income taxes consisted of the following:

​

​	​	​	​	​	​	​	​	​	​
​	​	Year ended December 31,
​		2022			2021			2020
​	​	(in thousands)
Current:	​	​	​	​	​	​	​	​	​
Federal	​	$	—	​	$	—	​	$	—
Foreign	​		1,506	​		183	​		22
State and local	​		577	​		110	​		204
Total current expense (benefit) for income taxes	​		2,083	​		293	​		226
Deferred:	​	​	​	​	​	​	​	​	​
Federal	​		(96,811)	​		119	​		136
Foreign	​		(484)	​		(507)	​		(320)
State and local	​		(20,745)	​		(263)	​		(115)
Total deferred expense (benefit) for income taxes	​		(118,040)	​		(651)	​		(299)
Total expense (benefit) for income taxes	​	$	(115,957)	​	$	(358)	​	$	(73)

​

The income tax expense (benefit) was reconciled to the tax expense computed at the U.S. federal statutory tax rate as follows:

​

​	​	​	​	​	​	​	​	​	​
​	​	Year ended December 31,
​		2022			2021			2020
​	​	(in thousands)
Income tax expense (benefit) at U.S. statutory rates	​	$	10,706	​	$	5,393	​	$	(1,777)
State taxes, net of U.S. federal impact	​		1,101	​		(607)	​		(121)
Effect of international operations	​		(11,149)	​		609	​		(131)
Research and development tax credit	​		(6,470)	​		(3,964)	​		726
Net change in valuation allowance	​		(104,972)	​		(2,389)	​		388
Change in accrual for unrecognized tax benefits	​		3,349	​		398	​		(6)
Share-based compensation	​	​	606	​	​	1,208	​	​	2,248
Asset impairment	​	​	—	​	​	—	​	​	728
Partial extinguishment of 2023 Notes	​	​	—	​	​	(1,090)	​	​	(2,292)
Adoption of new accounting standard	​	​	(9,295)	​	​	—	​	​	—
Other	​		167	​		84	​		164
Total expense (benefit) for income taxes	​	$	(115,957)	​	$	(358)	​	$	(73)

​

Deferred income taxes reflect the effect of temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for tax purposes. The tax effects of the temporary differences were as follows:

​

​	​	​	​	​	​	​
​	​	December 31,
​		2022			2021
​	​	(in thousands)
Deferred tax assets:	​	​	​	​	​	​
Inventory valuation		$	11,931	​	$	11,822
Net operating losses	​	​	5,647	​		38,816
Credit carry forwards	​	​	59,988	​	​	57,810
Warranty and installation accruals	​	​	1,862	​		1,730
Share-based compensation	​	​	5,267	​		4,033
Customer deposits and deferred revenue	​	​	24,504	​	​	9,908
Operating leases	​	​	8,349	​	​	8,464
Research and experimental ("R&E") capitalization	​	​	19,071	​	​	—
Other	​	​	6,553	​		5,880
Total deferred tax assets	​	​	143,172	​		138,463
Valuation allowance	​	​	(11,083)	​		(116,054)
Net deferred tax assets	​	​	132,089	​		22,409
​	​	​	​	​	​	​
Deferred tax liabilities:	​	​	​	​	​	​
Purchased intangible assets	​	​	8,724	​		6,633
Convertible Senior Notes	​	​	(39)	​	​	10,018
Operating leases	​	​	5,994	​	​	6,539
Depreciation	​	​	2,346	​		2,372
Total deferred tax liabilities	​	​	17,025	​		25,562
Net deferred taxes		$	115,064	​	$	(3,153)

​

The Company does not permanently reinvest its earnings from certain foreign jurisdictions and has accrued for foreign tax withholdings of $0.9 million on its unremitted earnings as of December 31, 2022.

​

During the year ended December 31, 2022, the Company recognized a net decrease of $104.9 million of its valuation allowance. This decrease was primarily related to the reversal of valuation allowances on domestic deferred tax assets. After considering recent significant positive evidence, including a consistent pattern of earnings in the past three years, as well as forecasted future earnings, it was determined that a valuation allowance was no longer required for certain deferred tax assets primarily recorded on tax credits and net operating losses in U.S. jurisdictions. The Company’s remaining valuation allowance of approximately $11.1 million relates primarily to state and local, and certain foreign jurisdiction tax attributes for which the Company could not conclude were realizable on a more-likely-than-not basis.

​

At December 31, 2022, the Company had U.S. federal research and development credits of $36.5 million that will expire between 2023 and 2042. The Company also has $8.7 million of foreign tax credits that expire in 2027. Additionally, the Company has state and local NOL carryforwards of approximately $59.3 million (a net deferred tax asset of $4.1 million, net of federal tax benefits and before the valuation allowance) that will expire between 2023 and 2041. Finally, the Company has state credits of $32.6 million, some of which are indefinite and others that will expire between 2024 and 2037.

A roll-forward of the Company’s uncertain tax positions for all U.S. federal, state, and foreign tax jurisdictions was as follows:

​

​	​	​	​	​	​	​	​	​	​
​	​	December 31,
​		2022			2021			2020
​	​	(in thousands)
Balance at beginning of year	​	$	12,761	​	$	12,363	​	$	12,369
Additions for tax positions related to current year	​		4,180	​		2,642	​		1,217
Additions for tax positions related to prior years	​		—	​		50	​		47
Reductions for tax positions related to prior years	​		(731)	​		(1,196)	​		(1,166)
Reductions due to the lapse of the statute of limitations	​		—	​		—	​		—
Settlements	​		(100)	​		(1,098)	​		(104)
Balance at end of year	​	$	16,110	​	$	12,761	​	$	12,363

​

If the amount of unrecognized tax benefits at December 31, 2022 were recognized, the Company’s income tax provision would decrease by $13.5 million. The gross amount of interest and penalties accrued in income tax payable in the Consolidated Balance Sheets was approximately $0.5 million and $0.4 million at December 31, 2022 and 2021, respectively.

​

The Company, or one of its subsidiaries, files income tax returns in the United States federal jurisdiction, and various state, local, and foreign jurisdictions. All material consolidated federal income tax matters have been concluded for years through 2017 subject to subsequent utilization of NOLs generated in such years. All material state and local income tax matters have been reviewed through 2012. The majority of the Company’s foreign jurisdictions have been reviewed through 2015. The Company’s major foreign jurisdictions’ statutes of limitation remain open with respect to the tax years 2015 through 2021 for Germany, 2017 through 2021 for China, 2021 for Taiwan, and 2020 and 2021 for Singapore. The Company does not anticipate that its uncertain tax position will change significantly within the next twelve months subject to the completion of the ongoing tax audits and any resultant settlement.

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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.

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