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INCOME TAXES | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Vimeo is included w ithin IAC’s ta x group for purposes of federal and consolidated state income tax return filings through the Spin-off. For all periods presented, current and deferred income tax provision have been computed on an as if standalone, separate tax return basis. Payments to and refunds from IAC for Vimeo's share of IAC’s con solidated state tax return liabilities have been reflected within cash flows from operating activities in the accompanying consolidated statement of cash flows. U.S. and foreign (loss) earnings before income taxes are as follows:
| Years Ended December 31,
| 2021 |  | 2020 |  | 2019
| (In thousands)
U.S. | $ | (54,085) |  |  | $ | (52,007) |  |  | $ | (76,052) |
Foreign | 2,146 |  |  | 2,207 |  |  | 820 |
Loss before income taxes | $ | (51,939) |  |  | $ | (49,800) |  |  | $ | (75,232) |
The income tax provisions for the years ended December 31, 2021, 2020, and 2019 primarily relate to international and state taxes for jurisdictions in which Vimeo conducts business. The components of the income tax provision are as follows:
| December 31,
| 2021 |  | 2020 |  | 2019
| (In thousands)
Current income tax provision: |  |  |  |  |
Federal | $ | 52 |  |  | $ | — |  |  | $ | — |
State | 85 |  |  | 64 |  |  | 39 |
Foreign | 761 |  |  | 561 |  |  | 242 |
Current income tax provision | 898 |  |  | 625 |  |  | 281 |
Deferred income tax (benefit) provision: |  |  |  |  |
Federal | (20) |  |  | 270 |  |  | — |
State | (5) |  |  | — |  |  | — |
Foreign | (45) |  |  | (67) |  |  | 64 |
Deferred income tax (benefit) provision | (70) |  |  | 203 |  |  | 64 |
Income tax provision | $ | 828 |  |  | $ | 828 |  |  | $ | 345 |
Vimeo is in a net operating loss ("NOL") position for U.S. federal and state income tax purposes and certain foreign jurisdictions. The largest deferred tax assets are NOLs. Vimeo has recorded a valuation allowance for the majority of its net deferred tax assets because it has concluded that it is more likely than not that the NOLs will not be utilized due to its history of pre-tax losses. The tax effects of cumulative temporary differences that give rise to significant deferred tax assets and deferred tax liabilities are as follows:
| December 31,
| 2021 |  | 2020
| (In thousands)
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 33,897 |  |  | $ | 31,721 |
Tax credit carryforwards | 9,066 |  |  | 6,903 |
Intangible assets with definite lives | 2,247 |  |  | 3,992 |
Disallowed interest carryforwards | 227 |  |  | 3,705 |
Stock-based compensation | 5,467 |  |  | 3,013 |
Other | 8,309 |  |  | 5,477 |
Total deferred tax assets | 59,213 |  |  | 54,811 |
Less: valuation allowance | (52,023) |  |  | (51,689) |
Net deferred tax assets | 7,190 |  |  | 3,122 |
Deferred tax liabilities: |  |  |
Prepaid expenses | (3,835) |  |  | (2,345) |
Leasehold improvements and equipment | (299) |  |  | (415) |
Right-of-use assets | (2,561) |  |  | (343) |
Withholding taxes | (506) |  |  | (270) |
Total deferred tax liabilities | (7,201) |  |  | (3,373) |
Net deferred tax liability | $ | (11) |  |  | $ | (251) |
In connection with the Spin-off, Vi meo was allocated an estimated portion of tax attributes related to the IAC consolidated federal and state tax filings pursuant to the Internal Revenue Code ("IRC") and applicable state law. Vimeo's net deferred tax position (computed on an as if standalone, separate return basis) was adjusted to reflect the estimated allocation with a corresponding adjustment to the valuation allowance. The allocation of tax attributes will be finalized following the completion of the 2021 U.S. federal and state tax filings which will be impacted by multiple factors, including, but not limited to, the amount of taxable income or loss generated by the IAC consolidated tax group in the year ended December 31, 2021. The composition of Vimeo's NOLs as of December 31, 2021 is as follows:
| Federal |  | State |  | Foreign |  | Total
| (In thousands)
Subject to expiration (a) | $ | 27,324 |  |  | $ | 53,867 |  |  | $ | — |  |  | $ | 81,191 |
Indefinite carryforward (b) | 65,765 |  |  | 7,466 |  |  | 46,938 |  |  | 120,169 |
Total NOLs (c) | $ | 93,089 |  |  | $ | 61,333 |  |  | $ | 46,938 |  |  | $ | 201,360 |
____________________ (a) Federal and state NOLs will expire at various times from 2033 through 2037 and 2022 through 2041, respectively. (b) All indefinite carryforward federal NOLs are subject to the Tax Cuts and Jobs Act 80% taxable income limitation. (C) Federal and state NOLs of $13.6 million and $12.9 million, respectively, are subject to limitations under IRC Section 382, separate return limitations, and applicable law. At December 31, 2021, Vimeo has tax credit carryforwards of $11.5 million. Of this amount, $9.5 million relates to credits for research activities and $2.0 million relates to credits for foreign taxes. These credit carryforwards will expire between 2026 and 2041. Vimeo 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. During 2021, Vimeo's valuation allowance increased by $0.3 million, primarily due to an increase in federal, state, and acquired foreign NOLs, partially offset by a decrease in attributes resulting from the Spin-off allocation. At December 31, 2021, Vimeo has a valuation allowance of $52.0 million related to the portion of tax loss carryforwards 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 provision to the amounts computed by applying the statutory federal income tax rate to loss before income taxes is shown as follows:
| Years Ended December 31,
| 2021 |  | 2020 |  | 2019
| (In thousands)
Income tax benefit at the federal statutory rate of 21% | $ | (10,907) |  |  | $ | (10,458) |  |  | $ | (15,799) |
State income taxes, net of effect of federal tax benefit | (138) |  |  | (159) |  |  | 31 |
Change in valuation allowance | 16,883 |  |  | 14,711 |  |  | 16,464 |
Stock-based compensation | (4,041) |  |  | (2,979) |  |  | 299 |
Research credit | (2,163) |  |  | (1,439) |  |  | (1,049) |
Transaction costs | 698 |  |  | 573 |  |  | 2 |
Other, net | 496 |  |  | 579 |  |  | 397 |
Income tax provision | $ | 828 |  |  | $ | 828 |  |  | $ | 345 |
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| Years Ended December 31,
| 2021 |  | 2020 |  | 2019
| (In thousands)
Balance at beginning of period | $ | 1,921 |  |  | $ | 1,475 |  |  | $ | 1,026 |
Additions based on tax positions related to prior years | — |  |  | 538 |  |  | — |
Settlements | (329) |  |  | (645) |  |  | — |
Additions based on tax positions related to the current year | 927 |  |  | 553 |  |  | 449 |
Balance at end of period | $ | 2,519 |  |  | $ | 1,921 |  |  | $ | 1,475 |
Vimeo recognizes interest and penalties related to unrecognized tax benefits, if applicable, in the "Income tax provision" in the accompanying consolidated statement of operations. At December 31, 2021, 2020, and 2019, unrecognized tax benefits were $2.5 million, $1.9 million, and $1.5 million, respectively. A portion of unrecognized tax benefits as of December 31, 2021 relate to tax positions included in IAC's consolidated tax return filings. If unrecognized tax benefits at December 31, 2021, 2020, and 2019 were subsequently recognized, there would be no impact to income tax expense due to the valuation allowance on deferred tax assets. Vimeo does not expect any settlements or changes to the existing unrecognized tax benefits by December 31, 2022. Vimeo is routinely under audit by federal, state, local, and foreign authorities as a result of previously filed separate company and consolidated tax returns with IAC. These audits include questioning the timing, amount, and allocation of income and deductions among various tax jurisdictions. The Internal Revenue Service ("IRS") has substantially completed its audit of IAC's federal income tax returns for the years ended December 31, 2013 through 2017 and has begun its audit of the years ended December 31, 2018 and 2019, which includes the operations of the Company. The statute of limitations for the years 2013 through 2019 have been extended to December 31, 2023. Various other jurisdictions are open to examination for tax years beginning with 2009. Income taxes payable, which is included in "Accrued expenses and other current liabilities" in the accompanying consolidated balance sheet, include unrecognized tax benefits that are considered to be sufficient to pay assessments that may result from the examination of prior year tax returns. Vimeo 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 the liquidity, results of operations, or financial condition of Vimeo, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future.

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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=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 http://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 http://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 http://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 http://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 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 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 http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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