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INCOME TAXES | 12 Months Ended
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Mar. 31, 2020
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The Tax Cuts and Jobs Act ("Tax Act") was enacted on December 22, 2017. Among numerous provisions, the Tax Act reduces the U.S. federal corporate tax rate from 35% t o 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and creates new taxes on certain foreign sourced earnings. The Company remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. Accordingly, deferred tax assets were adjusted down by about $23 million in the period ended December 31, 2017. However, because the Company recorded a full valuation allowance during the year ended December 31, 2018, the decrease in deferred tax assets from the tax rate change was fully offset by a corresponding decrease in valuation allowance, and therefore, resulted in no impact to the tax expense. The one-time transition tax is based on the Company's total post-1986 earnings and profits for which U.S. income taxes have been previously deferred. The Company recorded no one-time transition tax liability for its foreign subsidiaries as the Company's calculations concluded it does not have any untaxed foreign accumulated earnings as of the measurement date. The Company has made an accounting policy election to treat Global Intangible Low-Taxed Income (“GILTI”) as a current period cost. In response to the Tax Act, the SEC staff issued guidance on accounting for the tax effects of the Tax Act. The guidance provides a one-year measurement period for companies to complete the accounting. As of March 31, 2019, the Company has completed its analysis and recorded no adjustments. For the years ended March 31, 2020, 2019 and 2018, the Company recorded a provision for income taxes of approximately $0.8 million, $0.6 million, and $66.3 million, respectively. The components of the consolidated provision for income taxes for fiscal 2020, 2019 and 2018 consisted of the following (in thousands):
| March 31,
Current: | 2020 |  | 2019 |  | 2018
Federal | $ | — |  |  | $ | — |  |  | $ | (395 | )
State | 185 |  |  | 291 |  |  | 256 |
Foreign | 647 |  |  | 278 |  |  | 185 |
Total current tax provision | 832 |  |  | 569 |  |  | 46 |
Deferred |  |  |  |  |
Federal | — |  |  | — |  |  | 59,837 |
State | — |  |  | — |  |  | 6,664 |
Foreign | — |  |  | — |  |  | (253 | )
Total deferred tax provision | — |  |  | — |  |  | 66,248 |
Income tax provision | $ | 832 |  |  | $ | 569 |  |  | $ | 66,294 |
The Company's income (loss) from continuing operations before income taxes included $9.0 million, $0.2 million, and $(19.7) million of foreign subsidiary income for the fiscal years ended March 31, 2020, 2019 and 2018, respectively. The Company is permanently reinvesting the earnings of its profitable foreign subsidiaries. The Company intends to reinvest these profits in expansion of overseas operations. If the Company were to remit these earnings, the tax impact would be immaterial. Deferred tax assets and (liabilities) were comprised of the following (in thousands):
| March 31,
| 2020 |  | 2019
Deferred tax assets |  |  |
Net operating loss carryforwards | $ | 109,734 |  |  | $ | 61,740 |
Research and development and other credit carryforwards | 19,413 |  |  | 15,573 |
Stock-based compensation | 10,343 |  |  | 9,006 |
Reserves and allowances | 3,974 |  |  | 5,697 |
Lease liability | 24,492 |  |  | — |
Fixed assets and intangibles | 5,314 |  |  | 2,709 |
Gross deferred tax assets | 173,270 |  |  | 94,725 |
Valuation allowance | (115,435 | ) |  | (65,948 | )
Total deferred tax assets | $ | 57,835 |  |  | $ | 28,777 |
Deferred tax liabilities |  |  |
Deferred sales commissions | (21,608 | ) |  | (12,221 | )
Convertible debt | (16,626 | ) |  | (16,556 | )
Lease asset | (19,601 | ) |  | — |
Net deferred taxes | $ | — |  |  | $ | — |
The Company assesses the realizability of deferred tax assets based on the available evidence, including a history of taxable income and estimates of future taxable income. In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that all or some portion of deferred tax assets will not be realized. For the year ended March 31, 2020, the Company continues to maintain a full valuation allowance against its deferred tax assets as it considered the cumulative losses in recent periods to be substantial negative evidence. At March 31, 2020, management determined that a valuation allowance of approximately $115.4 million was needed compared with approximately $65.9 million as of March 31, 2019. At March 31, 2020, the Company had federal net operating loss carryforwards related to fiscal 2019 and 2020 of approximately $280.5 million, which carryforward indefinitely, and had carry-forwards related to prior years of $156.3 million, which begin to expire in 2021. As of March 31, 2020, the Company has state net operating loss carry-forwards of $203.7 million, which expire at various dates between 2029 and 2037. In addition, at March 31, 2020, the Company had research and development credit carryforwards for federal and California tax reporting purposes of approximately $12.9 million and $14.1 million, respectively. The federal income tax credit carryforwards will expire at various dates between 2022 and 2037, while the California income tax credits will carry forward indefinitely. A reconciliation of the Company's provision (benefit) for income taxes to the amounts computed using the statutory U.S. federal income tax rate is as follows (in thousands):
| Years Ended March 31,
| 2020 |  | 2019 |  | 2018
Tax benefit at statutory rate | $ | (36,163 | ) |  | $ | (18,441 | ) |  | $ | (11,790 | )
State income taxes before valuation allowance, net of federal effect | (7,680 | ) |  | (3,612 | ) |  | (1,042 | )
Foreign tax rate differential | (1,422 | ) |  | 71 |  |  | (1,188 | )
Research and development credits | (3,892 | ) |  | (3,744 | ) |  | (2,189 | )
Change in valuation allowance | 51,741 |  |  | 30,558 |  |  | 56,663 |
Compensation/option differences | (6,584 | ) |  | (7,277 | ) |  | (4,965 | )
Non-deductible compensation | 3,017 |  |  | 1,200 |  |  | 1,132 |
Tax Act rate change impact | — |  |  | — |  |  | 22,630 |
Foreign loss not benefited | 107 |  |  | 159 |  |  | 6,847 |
Other | 1,708 |  |  | 1,655 |  |  | 196 |
Total income tax provision (benefit) | $ | 832 |  |  | $ | 569 |  |  | $ | 66,294 |
For the fiscal year ended March 31, 2020 and 2019, the statutory federal rate of 21% was used. For the fiscal year ended March 31, 2018, a blended statutory U.S. federal income tax rate of 34% for 9 months and 21% for 3 months was used. The Company recognizes the tax benefit from uncertain tax positions if it is more likely than not that the tax positions will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefit is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
| Unrecognized Tax Benefits
| 2020 |  | 2019 |  | 2018
Balance at beginning of year | $ | 5,033 |  |  | $ | 3,980 |  |  | $ | 3,331 |
Gross increases - tax position in prior period | — |  |  | 17 |  |  | — |
Gross increases - tax position related to the current year | 1,082 |  |  | 1,036 |  |  | 649 |
Balance at end of year | $ | 6,115 |  |  | $ | 5,033 |  |  | $ | 3,980 |
At March 31, 2020, the Company had unrecognized tax benefits of $6.1 million, all of which, if recognized, would favorably affect the company's effective tax rate. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months. The Company's policy for recording interest and penalties associated with tax examinations is to record such items as a component of operating expense income before taxes. During the fiscal years ended March 31, 2020, 2019 and 2018, the Company did no t recognize any interest or penalties related to unrecognized tax benefits. Utilization of the Company's net operating loss and tax credit carryforwards can become subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 of the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration or elimination of the net operating loss and tax credit carryforwards before utilization. The Company has performed an analysis of its changes in ownership under Section 382 of the Internal Revenue Code. The Company currently believes that the Section 382 limitation will not limit utilization of the carryforwards prior to their expiration, with the exception of certain acquired loss and tax credit carryforwards. The Company files U.S. federal and state income tax returns in jurisdictions with varying statutes of limitations. The Company is currently under examination by the Illinois Department of Revenue for the fiscal years ended March 31, 2016 and 2017. The outcome of the ongoing examination is currently unknown. The tax years fiscal 2000 through fiscal 2020 generally remain subject to examination by federal and most state tax authorities.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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