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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | 7. Income taxes The components of the Company’s income before provision for income taxes are as follows:
|  | Years ended December 31, |
(amounts in thousands) |  | 2019 |  |  | 2018 |  |  | 2017 |
United States |  | $ | 22,553 |  |  | $ | 40,245 |  |  | $ | 29,121 |
Foreign |  |  | 1,719 |  |  |  | 210 |  |  |  | 535 |
Income before provision for income taxes |  | $ | 24,272 |  |  | $ | 40,455 |  |  | $ | 29,656 |
The provision for income taxes consists of the following:
|  | Years ended December 31, |
(amounts in thousands) |  | 2019 |  |  | 2018 |  |  | 2017 |
Current tax expense (benefit) |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (330 | ) |  | $ | — |  |  | $ | 245 |
State |  |  | 136 |  |  |  | (40 | ) |  |  | 240 |
Foreign |  |  | 560 |  |  |  | 171 |  |  |  | 206 |
Total current tax expense |  |  | 366 |  |  |  | 131 |  |  |  | 691 |
Deferred tax expense (benefit) |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 3,497 |  |  |  | (9,774 | ) |  |  | 8,709 |
State |  |  | (396 | ) |  |  | (1,630 | ) |  |  | 92 |
Foreign |  |  | (145 | ) |  |  | (117 | ) |  |  | (71 | )
Total deferred tax expense (benefit) |  |  | 2,956 |  |  |  | (11,521 | ) |  |  | 8,730 |
Tax benefit for change in valuation allowance |  |  | — |  |  |  | — |  |  |  | (767 | )
Total deferred tax expense (benefit), net |  |  | 2,956 |  |  |  | (11,521 | ) |  |  | 7,963 |
Income tax expense (benefit) |  | $ | 3,322 |  |  | $ | (11,390 | ) |  | $ | 8,654 |
The components of deferred tax assets and liabilities consist of the following:
(amounts in thousands) |  | As of December 31, |
Deferred tax assets (liabilities) |  | 2019 |  |  | 2018 |
Accrued expenses |  | $ | 7,981 |  |  | $ | 8,033 |
Net operating loss and credit carryforward |  |  | 20,087 |  |  |  | 19,805 |
Allowance, reserves and other |  |  | 1,984 |  |  |  | 3,490 |
Stock-based compensation |  |  | 3,257 |  |  |  | 3,253 |
Lease liability |  |  | 1,627 |  |  |  | — |
Deferred tax assets |  |  | 34,936 |  |  |  | 34,581 |
Property, plant, and equipment |  |  | (2,961 | ) |  |  | (4,683 | )
Intangible amortization |  |  | (16,192 | ) |  |  | — |
Right-of-use asset |  |  | (1,418 | ) |  |  | — |
Deferred tax liabilities |  |  | (20,571 | ) |  |  | (4,683 | )
Total |  | $ | 14,365 |  |  | $ | 29,898 |
Reconciliation of the federal statutory income tax rate to the effective income tax rate for the years ended December 31, 2019, 2018 and 2017 is as follows:
|  | Years ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
U.S. Statutory rate |  |  | 21.00 | % |  |  | 21.00 | % |  |  | 34.00 | %
State income taxes, net of federal benefit |  |  | 3.70 |  |  |  | (3.73 | ) |  |  | 0.37 |
Stock-based compensation |  |  | (0.81 | ) |  |  | (45.01 | ) |  |  | (30.40 | )
Change in valuation allowance |  |  | — |  |  |  | — |  |  |  | (2.59 | )
R&D credit, net of reserve |  |  | (8.97 | ) |  |  | (1.39 | ) |  |  | (1.43 | )
Expiration of net operating losses |  |  | — |  |  |  | — |  |  |  | 2.76 |
Effect of U.S tax law change |  |  | — |  |  |  | — |  |  |  | 25.55 |
Other |  |  | (1.24 | ) |  |  | 0.98 |  |  |  | 0.92 |
Effective income tax rate |  |  | 13.68 | % |  | (28.15)% |  |  |  | 29.18 | %
On December 22, 2017, TCJA was enacted into law, which significantly changes existing U.S. tax law and includes numerous provisions that affect the Company’s business. Changes include, but are not limited to, a corporate tax rate decrease from 34% to 21% effective for tax years beginning after December 31, 2017, expensing of capital expenditures, the transition of U.S. international taxation from a worldwide tax system to a territorial system, a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings, and limitations on the deductibility of certain executive compensation and other deductions. The Company is required to recognize the effect of the tax law changes in the period of enactment, including the transition tax, re-measuring the Company’s U.S. deferred tax assets and liabilities, as well as reassessing the net realizability of the Company’s deferred tax assets and liabilities. During the fourth quarter of 2017, the Company recorded a provisional net charge of $7,578 related to the TCJA due to the remeasurement of its deferred tax assets. The re was no impact related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings. As of December 31, 2018, the Company completed its evaluation and analysis of the TCJA and there was no additional adjustment to the provisional amount recorded in the fourth quarter of 2017. The Company operates in several taxing jurisdictions, including U.S. federal, multiple U.S. states and the Netherlands. The statute of limitations has expired for all tax years prior to 2015 for federal and prior to 2014 for various state tax purposes. However, the net operating loss generated on the Company’s federal and state tax returns in prior years may be subject to adjustments by the federal and state tax authorities. As of December 31, 2019, the Company had $54,883 and $25,679 of federal and state net operating loss carryforwards, respectively, and $46,426 of the total federal net operating loss carryforwards have an indefinite life while the remaining federal and state net operating loss carryforwards begin to expire in 2033 and 2028, respectively, if not utilized. As of December 31, 2019, the Company had federal and California research and development credit carryforward of $4,511 and $4,006, respectively. The federal credit will begin to expire in 2022; the California credit has indefinite carryforward. Utilization of the Company’s net operating loss and tax credit carryforwards may be subject to annual limitations arising from ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such annual limitations could result in the expiration of the net operating loss and tax credit carryforwards before their utilization. The Company assess the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of deferred tax assets. As of December 31, 2019, the Company determined that it is more likely than not that deferred tax assets are realizable due to significant positive evidence of cumulative earnings. Accordingly, the Company did not record a valuation allowance as of December 31, 2019. The Company recognizes interest and penalties on taxes, within its income tax provision on its consolidated statements of comprehensive income. No significant interest or penalties were recognized during the periods presented. Included in the balance of unrecognized tax benefits as of December 31, 2019, 2018 and 2017, were $1,889, $1,294 and $1,062, respectively, of tax benefits that, if recognized, would affect the effective tax rate. The Company believes that there will be no significant increases or decreases to unrecognized tax benefits within the next 12 months. A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:
(amounts in thousands) |  | December 31, |
Reconciliation of liability for unrecognized tax benefits |  | 2019 |  |  | 2018 |  |  | 2017 |
Balance at beginning of period |  | $ | 1,294 |  |  | $ | 1,062 |  |  | $ | 934 |
Additions based on tax positions related to current year |  |  | 595 |  |  |  | 232 |  |  |  | 128 |
Balance at end of period |  | $ | 1,889 |  |  | $ | 1,294 |  |  | $ | 1,062 |

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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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