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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision (benefit) for income taxes from continuing operations consists of the following for the fiscal years indicated:
| Fiscal Year
| 2016 |  | 2015 |  | 2014
Current |  |  |  |  |
Federal | $ | — |  |  | $ | — |  |  | $ | — |
State | 33,000 |  |  | 50,000 |  |  | 50,000 |
Foreign | 1,656,000 |  |  | — |  |  | — |
Total current provision | 1,689,000 |  |  | 50,000 |  |  | 50,000 |
Deferred |  |  |  |  |
Federal | (8,718,000 | ) |  | (5,356,000 | ) |  | (9,554,000 | )
State | (1,264,000 | ) |  | (62,000 | ) |  | (1,709,000 | )
Foreign | 2,308,000 |  |  | 188,000 |  |  | 411,000 |
Change in valuation allowance | 9,115,000 |  |  | 5,155,000 |  |  | 10,622,000 |
Total deferred provision (benefit) | 1,441,000 |  |  | (75,000 | ) |  | (230,000 | )
Total provision (benefit) for income taxes | $ | 3,130,000 |  |  | $ | (25,000 | ) |  | $ | (180,000 | )
The provision for income taxes for the fiscal year ended 2016 of $3,130,000 represents $33,000 of state tax, $978,000 of tax for gain on sale of the Korean subsidiary’s building, $671,000 for uncertain tax position, which includes potential penalties of $30,000, interest of $266,000 and foreign withholding of $1,441,000. US GAAP requires applying a 'more likely than not' threshold to the recognition and derecognition of uncertain tax positions either taken or expected to be taken by Kopin's income tax returns. The total amount of our gross tax liability for tax positions that may not be sustained under a 'more likely than not' threshold amounts to $374,000 as of December 31, 2016 including interest of $266,000. Kopin's policy regarding the classification of interest and penalties is to include these amounts as a component of income to expense. The following table sets forth the changes in Kopin's balance of unrecognized tax benefits for the year ended December 31, 2016.
($ in millions) | 2016
Unrecognized tax benefits- beginning balance | $—
Gross increases- prior year tax positions | 374,000
Gross increases- current year tax positions | $—
Gross decreases -FIN 48 liability release | $—
Gross decreases- expired statute of limitations | —
Unrecognized tax benefits- ending balance | $374,000
Net operating losses were not utilized in 2016, 2015 and 2014 to offset federal and state taxes. The actual income tax provision (benefit) reported from operations are different than those which would have been computed by applying the federal statutory tax rate to loss before income tax provision (benefit). A reconciliation of income tax provision (benefit) from continuing operations as computed at the U.S. federal statutory income tax rate to the provision for income tax benefit is as follows:
| Fiscal Year
| 2016 |  | 2015 |  | 2014
Tax provision at federal statutory rates | $ | (6,965,000 | ) |  | $ | (5,187,000 | ) |  | $ | (9,964,000 | )
State tax liability | 22,000 |  |  | 33,000 |  |  | 33,000 |
Foreign deferred tax rate differential | (678,000 | ) |  | 153,000 |  |  | 371,000 |
Foreign withholding | 1,441,000 |  |  | (75,000 | ) |  | (196,000 | )
Outside basis in Kowon, net unremitted earnings | (958,000 | ) |  | (180,000 | ) |  | (394,000 | )
Permanent items | 259,000 |  |  | (402,000 | ) |  | (21,000 | )
Increase in net state operating loss carryforwards | 775,000 |  |  | (158,000 | ) |  | (177,000 | )
Utilization of net operating losses for U.K. research and development refund | (142,000 | ) |  | 719,000 |  |  | 1,089,000 |
Provision to tax return adjustments and state tax rate change | (66,000 | ) |  | 264,000 |  |  | (516,000 | )
Tax credits | (762,000 | ) |  | (501,000 | ) |  | (610,000 | )
Non-deductible 162M compensation limitations | — |  |  | 40,000 |  |  | 196,000 |
Non-deductible equity compensation | 360,000 |  |  | (34,000 | ) |  | (687,000 | )
Uncertain tax position for transfer pricing | 671,000 |  |  | — |  |  | — |
Other, net | 58,000 |  |  | 148,000 |  |  | 74,000 |
Change in valuation allowance | 9,115,000 |  |  | 5,155,000 |  |  | 10,622,000 |
| $ | 3,130,000 |  |  | $ | (25,000 | ) |  | $ | (180,000 | )
Pretax foreign income (losses) from continuing operations were approximately $5,368,000, $(968,000) and $(2,588,000) for fiscal years 2016, 2015 and 2014, respectively. Deferred income taxes are provided to recognize the effect of temporary differences between tax and financial reporting. Deferred income tax assets and liabilities consist of the following:
| Fiscal Year
| 2016 |  | 2015
Deferred tax liability: |  |  |
Foreign withholding liability | $ | (2,571,000 | ) |  | $ | (1,207,000 | )
Foreign unremitted earnings | (3,659,000 | ) |  | (2,701,000 | )
Deferred tax assets: |  |  |
Federal net operating loss carryforwards | 46,968,000 |  |  | 28,984,000 |
State net operating loss carryforwards | 2,129,000 |  |  | 1,913,000 |
Foreign net operating loss carryforwards | 1,375,000 |  |  | 2,430,000 |
Equity awards | 2,258,000 |  |  | 2,249,000 |
Tax credits | 7,495,000 |  |  | 6,768,000 |
Property, plant and equipment | 814,000 |  |  | 1,113,000 |
Unrealized losses on investments | 3,535,000 |  |  | 3,240,000 |
Other | 5,823,000 |  |  | 3,667,000 |
Net deferred tax assets | 64,167,000 |  |  | 46,456,000 |
Valuation allowance | (66,738,000 | ) |  | (47,663,000 | )
| $ | (2,571,000 | ) |  | $ | (1,207,000 | )
As of December 31, 2016, the Company has available for tax purposes U.S. net operating loss carryforwards (NOLs) of $134.0 million expiring 2021 through 2036. The Company has recognized a full valuation allowance on its net deferred tax assets as the Company has concluded that such assets are not more likely than not to be realized. The increase in valuation allowance during fiscal year 2016 was primarily due to an increase in U.S. net operating loss carryforwards of $7.7 million generated in the current year and $10.3 million of net operating loss carryforwards from the adoption of ASU No. 2016-09. The $5.2 million increase in valuation allowance during fiscal year 2015 was primarily due to an increase in net operating losses. In fiscal year 2016 the Company adopted ASU No. 2016-09 Improvements to Employee Share-Based Payment Accounting. Upon the adoption the Company recorded a deferred tax asset of $10.3 million for the tax benefits from stock awards and recorded a valuation allowance against the deferred tax assets until they are realizable. The Company has suspended operations and terminated the majority of employees at its Korean subsidiary, Kowon. The assets, primarily buildings and land have been sold. It is more likely than not that the Company's share of the net book value of its Korean investment would be repatriated to the U.S. resulting in a Korean withholding tax of $2.6 million. As a result of the Company no longer being permanently reinvested in Korea, a deferred tax liability for the unremitted earnings in the Korean subsidiary has been recorded for $3.7 million. The Company’s income tax returns have not been examined by the Internal Revenue Service and are subject to examination for all years since 2001. State income tax returns are generally subject to examination for a period of three to five years after filing of the respective return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states. International jurisdictions have statutes of limitations generally ranging from three to seven years after filing of the respective return. Years still open to examination by tax authorities in major jurisdictions include Korea (2008 onward), Japan (2008 onward), Hong Kong (2010 onward) and United Kingdom (2013 onward). The Company is not currently under examination in these jurisdictions.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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