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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of loss before income taxes for the years ended December 31, 2021 and 2020 are as follows (in thousands):
| 2021 |  | 2020
U.S. | $ | (98,445) |  |  | $ | (106,785) |
Non-U.S. | 16,436 |  |  | (2,985) |
Loss before income taxes | $ | (82,009) |  |  | $ | (109,770) |
The components of income tax expense (benefit) for the years ended December 31, 2021 and 2020 are as follows (in thousands):
| 2021 |  | 2020
Current |  |  |
U.S. federal and state | $ | 1,235 |  |  | $ | (17,219) |
Non-U.S. | (3,384) |  |  | 4,487 |
Total current | (2,149) |  |  | (12,732) |
Deferred |  |  |
U.S. federal and state | (169) |  |  | 723 |
Non-U.S. | 2,960 |  |  | (872) |
Total deferred | 2,791 |  |  | (149) |
Income tax expense (benefit) | $ | 642 |  |  | $ | (12,881) |
The reconciliation between the actual provision for income taxes and that computed by applying the U.S. statutory rate to loss before income taxes are outlined below (in thousands):
| 2021 |  | 2020
Income tax benefit at the statutory rate | $ | (17,222) |  | (21.0) | % |  | $ | (23,052) |  | (21.0) | %
State taxes, net of federal tax benefit | 22 |  | — | % |  | (4,190) |  | (3.8) | %
Non-U.S. operations | (7,594) |  | (9.3) | % |  | 625 |  | 0.6 | %
Domestic incentives | (264) |  | (0.3) | % |  | (264) |  | (0.2) | %
Prior year federal, non-U.S. and state tax | (7,183) |  | (8.8) | % |  | (1,827) |  | (1.7) | %
Nondeductible expenses | 1,624 |  | 2.0 | % |  | 2,053 |  | 1.9 | %
U.S. CAREs Act | 113 |  | 0.1 | % |  | (15,981) |  | (14.6) | %
Valuation allowance | 31,079 |  | 37.9 | % |  | 25,349 |  | 23.1 | %
Other | 67 |  | 0.2 | % |  | 4,406 |  | 4.0 | %
Income tax benefit | $ | 642 |  | 0.8 | % |  | $ | (12,881) |  | (11.7) | %
Our effective tax rate was 0.8% and (11.7)% for the years ended December 31, 2021 and 2020, respectively. For the year ended December 31, 2020, we recognized a $16.0 million benefit related to a carryback claim for U.S. federal tax losses based on provisions in the U.S. Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) which was signed into law on March 27, 2020. The CARES Act provided relief to corporate taxpayers by permitting a five-year carryback of 2018-2020 NOLs, increased the 30% limitation on interest expense deductibility to 50% of adjusted taxable income for 2019 and 2020, and accelerated refunds for minimum tax credit carryforwards, among other provisions. The tax effects of changes in tax laws are recognized in the period in which the law is enacted. The tax benefit for the year ended December 31, 2021 and 2020 includes an increase in our valuation allowance of $31.1 million and $25.3 million, respectively, consisting of a full valuation allowance against our deferred tax assets in the U.S., U.K., Germany, Singapore, China and Saudi Arabia as further described below under the primary components of deferred taxes. The primary components of deferred taxes include (in thousands):
| 2021 |  | 2020
Deferred tax assets |  |  |
Reserves and accruals | $ | 3,978 |  |  | $ | 14,917 |
Operating lease liabilities | 11,176 |  |  | 3,097 |
Inventory | 14,692 |  |  | 37,784 |
Stock awards | 2,340 |  |  | 2,180 |
Net operating loss and other tax carryforwards | 109,402 |  |  | 53,781 |
Goodwill and intangible assets | 32,513 |  |  | 39,381 |
Fair value discount on 2025 Notes | 22,250 |  |  | 30,564 |
Property and equipment | 6,424 |  |  | — |
Other | 1,912 |  |  | 931 |
Gross deferred tax assets | 204,687 |  |  | 182,635 |
Valuation allowance | (198,366) |  |  | (167,287) |
Total deferred tax assets | 6,321 |  |  | 15,348 |
Deferred tax liabilities |  |  |
Property and equipment | — |  |  | (6,861) |
Operating lease assets | (6,490) |  |  | (6,818) |
Prepaid expenses and other | (462) |  |  | (3,519) |
Total deferred tax liabilities | (6,952) |  |  | (17,198) |
Net deferred tax liabilities | $ | (631) |  |  | $ | (1,850) |
Goodwill from certain acquisitions is tax deductible due to the acquisition structure as an asset purchase or due to tax elections made by the Company and the respective sellers at the time of acquisition. We have deferred tax assets related to net operating loss and other tax carryforwards in the U.S., and in certain states and foreign jurisdictions. We recognize deferred tax assets to the extent that we believe these assets are more likely than not to be realized. At December 31, 2021, we had $243.6 million of U.S. net operating loss carryforwards and $10.1 million of state net operating losses. Of these losses, $14.9 million will expire no later than 2037 if they are not utilized prior to that date. The remaining $238.8 million will not expire. We also had $186.9 million of non-U.S. net operating loss carryforwards with indefinite expiration dates. The ultimate realization of income tax benefits for these net operating loss carryforwards depends on our ability to generate sufficient taxable income in the respective taxing jurisdictions. Where we have unrecognized tax benefits in jurisdictions with existing net operating losses, we utilize the unrecognized tax benefits as a source of income to offset such losses. We do not anticipate being able to fully utilize all of the losses prior to their expiration in the following jurisdictions: the U.S, the U.K, Germany, Singapore, China and Saudi Arabia. During 2021, we recognized $31.1 million of tax expense related to the increase in our valuation allowance provided against our deferred tax assets to write down our deferred tax assets in these jurisdictions to what is more likely than not realizable. We increased our valuation allowance related to our U.S. and foreign deferred tax assets by $15.6 million and $15.5 million, respectively. In making such a determination for each of these jurisdictions, we considered all available positive and negative evidence, including our recent history of pretax losses over the prior three year period, the goodwill and intangible asset impairments for various reporting units, the future reversals of existing taxable temporary differences, the projected future taxable income or loss and tax-planning. Deferred tax liabilities arising from the difference between the financial reporting and income tax bases inherent in our foreign subsidiaries, referred to as outside basis differences, have not been provided for U.S. income tax purposes because we do not intend to sell, liquidate or otherwise trigger the recognition of U.S. taxable income with regard to our investment in these foreign subsidiaries. Determining the amount of U.S. deferred tax liabilities associated with outside basis differences is not practicable at this time. We file income tax returns in the U.S. as well as in various states and non-U.S. jurisdictions. With few exceptions, we are no longer subject to income tax examination by tax authorities in these jurisdictions prior to 2015. We account for uncertain tax positions in accordance with guidance in Accounting Standards Codification Topic 740, which prescribes the minimum recognition threshold a tax position taken or expected to be taken in a tax return is required to meet before being recognized in the financial statements. A reconciliation of the beginning and ending amount of uncertain tax positions is as follows (in thousands):
Balance at January 1, 2021 |  | $ | 12,382 |
Additional based on tax positions related to prior years |  | 367 |
Additional based on tax positions related to current year |  | 1,712 |
Reduction based on tax positions related to prior years |  | — |
Settlement with tax authorities |  | — |
Lapse of statute of limitations |  | (6,103) |
Balance at December 31, 2021 |  | 8,358 |
The total amount of unrecognized tax benefits at December 31, 2021 was $8.4 million, of which it is reasonably possible that $1.6 million could be settled during the next twelve-month period as a result of the conclusion of various tax audits or due to the expiration of the applicable statute of limitations. We estimate that $8.4 million of the unrecognized tax benefits at December 31, 2021, excluding consideration of valuation allowance, would impact our future effective income tax rate, if recognized. We recognize interest and penalties related to uncertain tax positions within the provision for income taxes in the consolidated statements of comprehensive loss. As of December 31, 2021 and 2020, we had accrued approximately $0.5 million and $1.4 million in interest and penalties, respectively. During the years ended December 31, 2021 and 2020, we recognized no material change in the interest and penalties related to uncertain tax positions.

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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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