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Note 9 - Income Taxes
 3 Months Ended
Jun. 30, 2021
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

Note 9. Income Taxes

 

For interim income tax reporting, we estimate our annual effective tax rate and apply this effective tax rate to our year-to-date pre-tax income. Each quarter, our estimate of the annual effective tax rate is updated, and if the estimated effective tax rate changes, a cumulative adjustment is made. Additionally, the tax effects of significant unusual or infrequently occurring items are recognized as discrete items in the interim period in which the events occur. The impact of changes in tax laws or rates on deferred tax amounts, impairments of non-deductible goodwill, excess benefits from stock-based compensation, and changes in tax reserves resulting from the finalization of tax audits or reviews are examples of significant unusual or infrequently occurring items that are recognized as discrete items in the interim period in which the event occurs. There is a potential for volatility of the effective tax rate due to several factors, including changes in the mix of the pre-tax income and the jurisdictions to which it relates, changes in tax laws and foreign tax holidays, settlement with taxing authorities, and foreign currency fluctuations.

 

Our effective income tax rate was (40.7)% and (61.4)% for the quarters ended June 30, 2021 and 2020, respectively. The effective tax rate for the quarter ended June 30, 2021 differed from the statutory federal rate of 21% primarily due to the benefit of share-based payment awards for employees and foreign derived intangible income, partially offset by the limitations imposed by Section 162(m), and expenses for state income taxes.

 

The tax year ended December 31, 2018 for Gyros US, Inc., and its subsidiary, which we acquired as part of the Gyros Protein Technologies ("GPT") acquisition, is under examination by the IRS. We expect the examination to be completed during fiscal year 2022. Additionally, the tax year ended  March 31, 2019 for Mesa Laboratories, Inc. is under review by the IRS. We do not currently have a timeline for the completion of the Mesa Laboratories, Inc. examination. 

 

Since we are subject to audit by various taxing authorities, it is reasonably possible that the amount of unrecognized tax benefits will change during the next 12 months. However, we do not expect the change, if any, to have a material effect on our financial condition or results of operations within the next 12 months.