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INCOME TAXES | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The Company is included within IAC’s tax group for purposes of federal and consolidated state income tax return filings. In all periods presented, the income tax benefit and/or provision has been computed for the Company on an as if standalone, separate return basis and payments to and refunds from IAC for the Company’s share of IAC’s consolidated federal and state tax return liabilities/receivables calculated on this basis have been reflected within cash flows from operating activities in the accompanying consolidated statement of cash flows. The tax sharing agreement between the Company and IAC governs the parties’ respective rights, responsibilities and obligations with respect to tax matters, including responsibility for taxes attributable to the Company, entitlement to refunds, allocation of tax attributes and other matters and, therefore, ultimately governs the amount payable to or receivable from IAC with respect to income taxes. Any differences between taxes currently payable or receivable from IAC under the tax sharing agreement and the current tax provision computed on an as if standalone, separate return basis for GAAP are reflected as adjustments to additional paid-in capital and as financing activities within the statement of cash flows. U.S. and foreign (loss) earnings before income taxes and noncontrolling interests are as follows:
| Years Ended December 31,
| 2020 |  | 2019 |  | 2018
| (In thousands)
U.S. | $ | (10,913) |  |  | $ | 39,821 |  |  | $ | 82,652 |
Foreign | (8,415) |  |  | (6,175) |  |  | (12,628) |
Total | $ | (19,328) |  |  | $ | 33,646 |  |  | $ | 70,024 |
The components of the income tax (benefit) provision are as follows:
| Years Ended December 31,
| 2020 |  | 2019 |  | 2018
| (In thousands)
Current income tax provision: |  |  |  |  |
Federal | $ | (306) |  |  | $ | (43) |  |  | $ | — |
State | 1,408 |  |  | 819 |  |  | (20) |
Foreign | (992) |  |  | 806 |  |  | 905 |
Current income tax provision | 110 |  |  | 1,582 |  |  | 885 |
Deferred income tax benefit |  |  |  |  |
Federal | (5,163) |  |  | (3,416) |  |  | (5,549) |
State | (6,249) |  |  | 517 |  |  | (1,100) |
Foreign | (3,866) |  |  | (351) |  |  | (1,719) |
Deferred income tax benefit | (15,278) |  |  | (3,250) |  |  | (8,368) |
Income tax benefit | $ | (15,168) |  |  | $ | (1,668) |  |  | $ | (7,483) |
The tax effects of cumulative temporary differences that give rise to significant deferred tax assets and deferred tax liabilities are presented below. The valuation allowance relates to deferred tax assets for which it is more likely than not that the tax benefit will not be realized.
| December 31,
| 2020 |  | 2019
| (In thousands)
Deferred tax assets: |  |  |
Net operating loss (“NOL”) carryforwards | $ | 182,449 |  |  | $ | 158,727 |
Stock-based compensation | 18,955 |  |  | 33,613 |
Long-term lease liabilities | 29,314 |  |  | 32,642 |
Other | 32,885 |  |  | 26,226 |
Total deferred tax assets | 263,603 |  |  | 251,208 |
Less valuation allowance | (77,076) |  |  | (71,472) |
Net deferred tax assets | 186,527 |  |  | 179,736 |
Deferred tax liabilities: |  |  |
Intangible assets | (47,858) |  |  | (63,900) |
Right-of-use assets | (21,496) |  |  | (24,836) |
Capitalized software, leasehold improvements and equipment | (16,152) |  |  | (12,377) |
Capitalized costs to obtain a contract with a customer | (12,233) |  |  | (9,400) |
Other | (4,338) |  |  | (83) |
Total deferred tax liabilities | (102,077) |  |  | (110,596) |
Net deferred tax assets | $ | 84,450 |  |  | $ | 69,140 |
The portion of the December 31, 2020 deferred tax assets that will be payable to IAC pursuant to the tax sharing agreement, upon realization, is $88.0 million. At December 31, 2020, the Company has federal and state NOLs of $431.5 million and $375.9 million, respectively, available to offset future income. Of these federal NOLs, $59.3 million can be carried forward indefinitely and $372.2 million, if not utilized, will expire at various times between 2030 and 2037. The state NOLs, if not utilized, will expire at various times primarily between 2025 and 2040. Federal and state NOLs of $166.1 million and $79.9 million, respectively, can be used against future taxable income without restriction and the remaining NOLs will be subject to limitations under Section 382 of the Internal Revenue Code, separate return limitations, and applicable state law. At December 31, 2020, the Company has foreign NOLs of $413.7 million available to offset future income. Of these foreign NOLs, $374.3 million can be carried forward indefinitely and $39.4 million, if not utilized, will expire at various times between 2022 and 2039. During 2020, the Company recognized tax benefits related to NOLs of $12.6 million. At December 31, 2020, the Company has tax credit carryforwards of $16.6 million relating to federal and state tax credits for research activities. Of these credit carryforwards, $0.6 million can be carried forward indefinitely and $16.0 million, if not utilized, will expire between 2024 and 2040. The Company regularly assesses the realizability of deferred tax assets considering all available evidence including, to the extent applicable, the nature, frequency and severity of prior cumulative losses, forecasts of future taxable income, tax filing status, the duration of statutory carryforward periods, available tax planning and historical experience. At December 31, 2020, the Company has a U.S. gross deferred tax asset of $176.4 million that the Company expects to fully utilize on a more likely than not basis. During 2020, the Company’s valuation allowance increased by $5.6 million primarily due to an increase in foreign NOLs offset by a decrease in state NOLs. At December 31, 2020, the Company has a valuation allowance of $77.1 million related to the portion of NOLs and other items for which it is more likely than not that the tax benefit will not be realized. A reconciliation of the income tax benefit to the amounts computed by applying the statutory federal income tax rate to earnings before income taxes is shown as follows:
| Years Ended December 31,
| 2020 |  | 2019 |  | 2018
| (In thousands)
Income tax (benefit) provision at the federal statutory rate of 21% | $ | (4,058) |  |  | $ | 7,066 |  |  | $ | 14,705 |
State income taxes, net of effect of federal tax benefit | 1,641 |  |  | 2,693 |  |  | 4,702 |
Deferred tax adjustment for enacted changes in tax law and rates | (5,244) |  |  | $ | 502 |  |  | $ | (1,431) |
Change in judgement on beginning of the year valuation allowance | (3,544) |  |  | $ | — |  |  | $ | — |
Stock-based compensation | (2,914) |  |  | (12,768) |  |  | (25,184) |
Unbenefited losses | 2,899 |  |  | 1,523 |  |  | 2,227 |
Research credit | (2,494) |  |  | (3,308) |  |  | (1,169) |
Net adjustment related to the reconciliation of income tax provision accruals to tax returns | (743) |  |  | 448 |  |  | (1,669) |
Other, net | (711) |  |  | 2,176 |  |  | 336 |
Income tax benefit | $ | (15,168) |  |  | $ | (1,668) |  |  | $ | (7,483) |
A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest, is as follows:
| December 31,
| 2020 |  | 2019 |  | 2018
| (In thousands)
Balance at January 1 | $ | 4,025 |  |  | $ | 2,356 |  |  | $ | 1,548 |
Additions based on tax positions related to the current year | 1,676 |  |  | 1,325 |  |  | 411 |
Additions for tax positions of prior years | 423 |  |  | 344 |  |  | 397 |
Settlements | (856) |  |  | — |  |  | — |
Balance at December 31 | $ | 5,268 |  |  | $ | 4,025 |  |  | $ | 2,356 |
The Company is routinely under audit by federal, state, local and foreign authorities in the area of income tax as a result of previously filed separate company and consolidated tax returns with IAC. These audits include questioning the timing and the amount of income and deductions and the allocation of income and deductions among various tax jurisdictions. The Internal Revenue Service has substantially completed its audit of IAC’s federal income tax returns for the years ended December 31, 2010 through 2016, which includes the operations of the Company. The IRS began its audit of the year ended December 31, 2017 in the second quarter of 2020. The statute of limitations for the years 2010 through 2012 and for the years 2013 through 2017 have been extended to May 31, 2021 and December 31, 2021, respectively. Returns filed in various other jurisdictions are open to examination for various tax years beginning with 2009. Income taxes payable include unrecognized tax benefits considered sufficient to pay assessments that may result from examination of prior year tax returns. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may not accurately anticipate actual outcomes and, therefore, may require periodic adjustment. Although management currently believes changes in unrecognized tax benefits from period to period and differences between amounts paid, if any, upon resolution of issues raised in audits and amounts previously provided will not have a material impact on liquidity, results of operations, or financial condition of the Company, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future. The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the income tax provision. At December 31, 2020, there are no accruals for interest and penalties. At December 31, 2019, accruals for interest are not material and there are no accruals for penalties. At December 31, 2020 and 2019, unrecognized tax benefits, including interest, are $5.3 million and $4.1 million respectively; all of which are for tax positions included in IAC’s consolidated tax return filings. If unrecognized tax benefits at December 31, 2020 are subsequently recognized, the income tax provision would be reduced by $5.1 million. The comparable amount as of December 31, 2019 is $4.0 million. The Company believes that it is reasonably possible that its unrecognized tax benefits could decrease by $0.5 million by December 31, 2021, due to settlements, all of which would reduce the income tax provision. At December 31, 2020, all of the Company’s international cash can be repatriated without any significant tax consequences.

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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 http://asc.fasb.org/extlink&oid=84230637&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 http://asc.fasb.org/extlink&oid=116825942&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 http://asc.fasb.org/extlink&oid=84230637&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 http://asc.fasb.org/extlink&oid=116825942&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 http://asc.fasb.org/extlink&oid=84230637&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 http://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 http://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 http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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