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INCOME TAXES | 12 Months Ended
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Aug. 31, 2022
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES We utilize ASC 740 to account for income taxes which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities. The components of the income tax provision for the years ended August 31, 2022, 2021, and 2020 were as follows:
(in thousands) |  | 2022 |  | 2021 |  | 2020
Current |  |  |  |  |  |
Federal |  | $ | 2,518 |  |  | $ | 1,315 |  |  | $ | 2,098 |
State |  | 611 |  |  | 450 |  |  | 478 |
Foreign |  | (228) |  |  | 166 |  |  | 39 |
Total current tax expense |  | 2,901 |  |  | 1,931 |  |  | 2,615 |
Deferred |  |  |  |  |  |
Federal |  | (4) |  |  | (379) |  |  | (428) |
State |  | (265) |  |  | (249) |  |  | (132) |
Total deferred federal and state |  | (269) |  |  | (628) |  |  | (560) |
Total |  | $ | 2,632 |  |  | $ | 1,303 |  |  | $ | 2,055 |
A reconciliation of the expected income tax computed using the federal statutory income tax rate to the Company's effective income tax rate is as follows for the years ended August 31, 2022, 2021, and 2020:
| 2022 |  | 2021 |  | 2020
Income tax computed at federal statutory tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State taxes, net of federal benefit | 3.2 |  |  | 2.0 |  |  | 4.1 |
Meals & entertainment | — |  |  | — |  |  | 0.1 |
Stock-based compensation | 0.6 |  |  | (6.8) |  |  | (1.2) |
Other permanent differences | 0.4 |  |  | (0.3) |  |  | (0.3) |
Research and development credit | (2.2) |  |  | (1.6) |  |  | (2.8) |
Foreign-tax-related differences | (3.2) |  |  | (2.6) |  |  | (1.4) |
Research & credit adjustments to expense | — |  |  | 0.2 |  |  | 0.3 |
Change in prior year estimated taxes | (2.4) |  |  | (0.1) |  |  | (1.8) |
Total | 17.4 | % |  | 11.8 | % |  | 18.0 | %
Significant components of the Company's deferred tax assets and liabilities for income taxes for the years ended August 31, 2022, and 2021 are as follows:
(in thousands) |  | 2022 |  | 2021
Deferred tax assets: |  |  |  |
Accrued compensation |  | $ | 563 |  |  | $ | 586 |
Deferred revenue |  | 241 |  |  | 102 |
Capitalized merger costs |  | 703 |  |  | 703 |
Intellectual property |  | 7 |  |  | 7 |
Research and development credits |  | 347 |  |  | 66 |
Foreign tax credits |  | 101 |  |  | — |
State taxes |  | 128 |  |  | 72 |
Allowance for doubtful accounts |  | 3 |  |  | 20 |
State tax deferred |  | 28 |  |  | 80 |
Total deferred tax assets |  | 2,121 |  |  | 1,636 |
Less: Valuation allowance |  | — |  |  | — |
Deferred tax asset |  | 2,121 |  |  | 1,636 |
Deferred tax liabilities: |  |  |  |
Property and equipment |  | (109) |  |  | (83) |
State tax deferred |  | (30) |  |  | (26) |
Intellectual property |  | (1,139) |  |  | (1,456) |
Capitalized computer software development costs |  | (2,299) |  |  | (1,797) |
Total deferred tax liabilities |  | (3,577) |  |  | (3,362) |
Net deferred tax liabilities |  | $ | (1,456) |  |  | $ | (1,726) |
We follow ASC 740 with regard to our accounting for uncertainty in income taxes recognized in the financial statements. Such guidance prescribes a recognition threshold of more likely than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, we determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position and assume that the tax position will be examined by taxing authorities. Interest and penalties were immaterial for fiscal years 2022, 2021, and 2020, respectively. We file income tax returns with the IRS and various state jurisdictions as well as with the countries of India, Belgium and France. Our federal income tax returns for fiscal year 2019 through 2021 are open for audit, and our state tax returns for fiscal year 2018 through 2021 remain open for audit. Our review of prior-year tax positions using the criteria and provisions presented in guidance issued by FASB did not result in a material impact on our financial position or results of operations.

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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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