XML 80 R16.htm IDEA: XBRL DOCUMENT
v3.19.3

Income Taxes | 12 Months Ended
--- | ---
Dec. 29, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The (benefit) provision for income taxes from continuing operations consists of the following for the fiscal years indicated:
| Fiscal Year
| 2018 |  | 2017 |  | 2016
Current |  |  |  |  |
State | $ | 5,000 |  |  | $ | 5,000 |  |  | $ | 33,000 |
Foreign | 25,000 |  |  | (568,000 | ) |  | 1,656,000 |
Total current provision | 30,000 |  |  | (563,000 | ) |  | 1,689,000 |
Deferred |  |  |  |  |
Federal | (7,307,000 | ) |  | 15,461,000 |  |  | (8,718,000 | )
State | (360,000 | ) |  | (493,000 | ) |  | (1,264,000 | )
Foreign | 300,000 |  |  | (187,000 | ) |  | 2,308,000 |
Change in valuation allowance | 7,367,000 |  |  | (17,181,000 | ) |  | 9,115,000 |
Total (benefit) deferred provision | — |  |  | (2,400,000 | ) |  | 1,441,000 |
Total provision (benefit) for income taxes | $ | 30,000 |  |  | $ | (2,963,000 | ) |  | $ | 3,130,000 |
The following table sets forth the changes in Kopin's balance of unrecognized tax benefits for the year ended:
| Total
Unrecognized tax benefits at December 26, 2016 | $ | 374,000 |
Gross increases—prior year tax positions | 20,000 |
Unrecognized tax benefits at December 30, 2017 | 394,000 |
Gross increases—current year tax positions | — |
Unrecognized tax benefits at December 29, 2018 | $ | 394,000 |
U.S. 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 $0.4 million as of December 29, 2018 and December 30, 2017. Kopin's policy regarding the classification of interest and penalties is to include these amounts as a component of income tax expense. The total amount of accrued interest and penalties related to the Company's unrecognized tax benefits was $0.5 million as of December 29, 2018 and December 30, 2017. Net operating losses were not utilized in 2018, 2017 and 2016 to offset federal and state taxes. The actual income tax (benefit) provision reported from operations are different than those which would have been computed by applying the federal statutory tax rate to loss before income tax (benefit) provision. A reconciliation of income tax (benefit) provision 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
| 2018 |  | 2017 |  | 2016
Tax provision at federal statutory rates | $ | (7,515,000 | ) |  | $ | (9,884,000 | ) |  | $ | (6,965,000 | )
State tax liability | 5,000 |  |  | 5,000 |  |  | 22,000 |
Foreign deferred tax rate differential | (39,000 | ) |  | 15,000 |  |  | (678,000 | )
Foreign withholding | 301,000 |  |  | (771,000 | ) |  | 1,441,000 |
Outside basis in Kowon, net unremitted earnings | (468,000 | ) |  | (2,888,000 | ) |  | 958,000 |
Permanent items | 186,000 |  |  | 774,000 |  |  | 259,000 |
Increase in net state operating loss carryforwards | (406,000 | ) |  | (300,000 | ) |  | (502,000 | )
Utilization of net operating losses for U.K. research and development refund | — |  |  | — |  |  | (142,000 | )
Provision to tax return adjustments and tax rate change (1) | (76,000 | ) |  | 24,833,000 |  |  | (66,000 | )
Tax credits | 239,000 |  |  | 24,000 |  |  | (762,000 | )
Non-deductible 162M compensation limitations | 13,000 |  |  | 199,000 |  |  | — |
Non-deductible equity compensation | 290,000 |  |  | 1,901,000 |  |  | (360,000 | )
Uncertain tax position for transfer pricing | 91,000 |  |  | 203,000 |  |  | 671,000 |
Other, net | 45,000 |  |  | 107,000 |  |  | 139,000 |
Change in valuation allowance | 7,364,000 |  |  | (17,181,000 | ) |  | 9,115,000 |
| $ | 30,000 |  |  | $ | (2,963,000 | ) |  | $ | 3,130,000 |
(1) | Due to the Tax Act which was enacted in December 2017, our U.S. deferred tax assets and liabilities as of December 30, 2017 were re-measured to 21%. The provisional amount recorded related to the remeasurement of our deferred tax balance was approximately $25.1 million of tax expense.
Pretax foreign income from continuing operations was approximately $0.7 million for fiscal year ended 2018, pretax foreign loss from continuing operations was approximately $0.4 million for fiscal year ended 2017 and pretax foreign income from continuing operations was approximately $5.4 million for fiscal year ended 2016. 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
| 2018 |  | 2017
Deferred tax liability: |  |  |
Foreign withholding liability | $ | (538,000 | ) |  | $ | (812,000 | )
Foreign unremitted earnings | — |  |  | (468,000 | )
Intangible assets | — |  |  | (259,000 | )
Deferred tax assets: |  |  |
Federal net operating loss carryforwards | 41,755,000 |  |  | 34,555,000 |
State net operating loss carryforwards | 3,114,000 |  |  | 2,708,000 |
Foreign net operating loss carryforwards | 1,259,000 |  |  | 1,500,000 |
Equity awards | 444,000 |  |  | 55,000 |
Tax credits | 7,231,000 |  |  | 7,470,000 |
Property, plant and equipment | 640,000 |  |  | 544,000 |
Unrealized losses on investments | 1,848,000 |  |  | 1,792,000 |
Other | 1,707,000 |  |  | 3,037,000 |
Net deferred tax assets | 57,460,000 |  |  | 50,122,000 |
Valuation allowance | (58,006,000 | ) |  | (50,642,000 | )
| $ | (546,000 | ) |  | $ | (520,000 | )
The valuation allowance was approximately $58.0 million and $50.6 million at December 29, 2018 and December 30, 2017, respectively, primarily driven by U.S. net operating loss carryforwards ("NOLs") and tax credits that the Company does not believe will ultimately be realized. On December 22, 2017, the President signed the Tax Cuts and Jobs Act of 2017 ("2017 Act") which enacted a wide range of changes to the U.S. corporate income tax system. The 2017 Act reduced the U.S. corporate statutory federal tax rate to 21% effective in 2018, eliminated the domestic manufacturing deduction benefit and introduced other tax base broadening measures, changed rules for expensing and capitalizing business expenditures, established a territorial tax system for foreign earnings as well as a minimum tax on certain foreign earnings, provided for a one-time transition tax on previously undistributed foreign earnings, and introduced new rules for the treatment of certain foreign income. Also on December 22, 2017, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 118 (SAB 118), which provided companies with additional guidance on how to account for the 2017 Act in their financial statements, allowing companies to use a measurement period. As of December 30, 2017, we made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax on previously undistributed foreign earnings and the Company did not recognize any provisional amounts in the (benefit) provision for income taxes in accordance with SAB 118. As of December 29, 2018, we had finalized our provisional estimates for the remeasurement of our existing U.S. deferred tax balances and the one-time transition tax and did not recognize amounts in the (benefit) provision for income taxes. Deferred tax assets and liabilities—The Company has remeasured certain deferred tax assets and liabilities, excluding those items that will be included on the Company's 2017 tax return, based on the rates the Company expects to realize the deferred tax assets and liabilities at in the future, which is generally 21%. The amount recorded related to the remeasurement of the Company's deferred tax balance was approximately $25.1 million of tax expense. At December 29, 2018, we have finalized our provisional estimate for the remeasurement of our existed deferred tax balances with no additional adjustment. The Company recorded a reduction in the valuation allowance during 2017 of approximately $1.0 million which was previously recorded against the Company’s AMT credit. The Company expects to receive a refund of $1.0 million from our AMT credit in accordance with the Tax Act and have recorded the receivable in "Other assets" on the Company's consolidated balance sheets at December 29, 2018. In addition to the changes described above, the 2017 Act imposes a U.S. tax on global intangible low taxed income ("GILTI") that is earned by certain foreign affiliates owned by a U.S. shareholder. The computation of GILTI is generally intended to impose tax on the earnings of a foreign corporation that are deemed to exceed a certain threshold return relative to the underlying business investment. The Company has made a policy election to treat future taxes related to GILTI as a current period expense in the reporting period in which the tax is incurred. Foreign tax effects—The one-time transition tax is based on our total post-1986 earnings and profits (“E&P”) for which the Company has previously deferred U.S. income taxes. The Company is estimating that the Company will not have a provisional requirement amount for our one-time transition tax liability, using an estimated applicable tax rate of 15.5%, resulting in no increase in income tax expense. The Company has not yet completed our calculation of the total post-1986 foreign E&P for these foreign subsidiaries. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may change when the Company finalizes the calculation of post-1986 foreign E&P previously deferred from U.S. federal taxation and finalize the amounts held in cash or other specified assets. The Company also expects additional clarifying and interpretative technical guidance to be issued related to the calculation of our one-time transition tax. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax and any additional outside basis difference inherent in these entities as these amounts continue to be indefinitely reinvested in foreign operations. As of December 29, 2018, the Company has available for tax purposes NOLs of $198.8 million expiring 2022 through 2037. 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 decrease in valuation allowance during fiscal year 2018 was a result of decreases in the federal tax rate as part of the Tax Act and a reduction in the valuation allowance as a result of deferred tax liabilities assumed as part of the acquisition of NVIS. The Tax Act imposes a mandatory transition tax on accumulated foreign earnings and eliminates U.S. taxes on foreign subsidiary distribution. As a result, earnings in foreign jurisdictions are available for distribution to the U.S. without incremental U.S. taxes. Under the provisions of Section 382, certain substantial changes in Kopin’s ownership may limit in the future the amount of net operating loss carryforwards that could be used annually to offset future taxable income and income tax liability. 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 twenty years after filing of the respective return. Years still open to examination by tax authorities in major jurisdictions include Korea (2009 onward), Japan (2009 onward), Hong Kong (2011 onward) and United Kingdom (2014 onward). The Company is not currently under examination in these jurisdictions.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration