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Note 13 - Income Taxes

9 Months Ended

Sep. 30, 2020

13.

Income Taxes:

For the three months ended September 30, 2020, the Company recorded an income tax benefit of $0.6 million, or 27.0%, compared to an income tax provision of $0.4 million, or 42.3%, for the three months ended September 30, 2019. For the nine months ended September 30, 2020, the Company recorded an income tax benefit of $3.3 million, or 30.9%, compared to an income tax provision of $1.8 million, or 27.8%, for the nine months ended September 30, 2019.

Normally, the tax provision or benefit for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items that are taken into account in the relevant period. Each quarter, the Company updates the estimate of the annual effective tax rate, and if the estimated tax rate changes, the Company makes a cumulative adjustment. Due to the COVID-19 pandemic and the uncertainty around forecasting an annual effective tax rate, the tax provision was recorded based on the actual effective tax rate including discrete items for the three and nine months ended September 30, 2020, including the ability to carryback losses incurred in 2020 to years where the Federal tax rate was 35% versus the current 21% tax rate.

The quarterly tax provision and the quarterly estimate of the annual effective tax rate is subject to significant volatility due to several factors, including variability in accurately predicting the Company’s pre-tax and taxable income and loss and the mix of jurisdictions to which they relate, changes in law and relative changes in expenses or losses for which tax benefits are not recognized. Additionally, the effective tax rate can be more or less volatile based on the amount of pre-tax income. For example, the impact of discrete items and non-deductible expenses on the effective tax rate is greater when the pre-tax income is lower.

- 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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