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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Before Income Taxes | Income before income taxes consists of the following (in thousands):
|  | Years Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Domestic |  | $ | 16,552 |  |  | $ | 22,424 |  |  | $ | 7,237 |
Foreign |  |  | 14,172 |  |  |  | 10,767 |  |  |  | 5,696 |
Total |  | $ | 30,724 |  |  | $ | 33,191 |  |  | $ | 12,933 |
Components of Income Tax Expense | The components of the income tax expense are as follows (in thousands):
|  | Years Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 9,349 |  |  | $ | 4,203 |  |  | $ | 603 |
State |  |  | 3,819 |  |  |  | 2,272 |  |  |  | 2,054 |
Foreign |  |  | 2,402 |  |  |  | 2,147 |  |  |  | 1,963 |
Total current |  |  | 15,570 |  |  |  | 8,622 |  |  |  | 4,620 |
Deferred: |  |  |  |  |  |  |  |  |
Federal |  |  | (5,513 | ) |  |  | 334 |  |  |  | 490 |
State |  |  | (1,788 | ) |  |  | (663 | ) |  |  | (1,641 | )
Foreign |  |  | 649 |  |  |  | 54 |  |  |  | (526 | )
Total deferred |  |  | (6,652 | ) |  |  | (275 | ) |  |  | (1,677 | )
Income tax expense |  | $ | 8,918 |  |  | $ | 8,347 |  |  | $ | 2,943 |
Reconciliation of Federal Statutory Rate | A reconciliation of the federal statutory rate to Forrester’s effective tax rate is as follows:
|  | Years Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Income tax provision at federal statutory rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
Increase (decrease) in tax resulting from: |  |  |  |  |  |  |  |  |
State tax provision, net of federal benefit |  |  | 5.2 |  |  |  | 3.8 |  |  |  | 2.6 |
Foreign tax rate differential |  |  | (0.5 | ) |  |  | (0.4 | ) |  |  | (0.2 | )
Stock compensation |  |  | 0.9 |  |  |  | (0.4 | ) |  |  | 5.7 |
Withholding taxes |  |  | 1.7 |  |  |  | 1.3 |  |  |  | 3.3 |
Non-deductible expenses |  |  | 1.5 |  |  |  | — |  |  |  | 2.2 |
Change in valuation allowance |  |  | 1.0 |  |  |  | — |  |  |  | (5.8 | )
Foreign subsidiary income subject to U.S. tax |  |  | 0.6 |  |  |  | (0.5 | ) |  |  | (4.3 | )
Change in tax legislation |  |  | (1.6 | ) |  |  | (0.3 | ) |  |  | (1.9 | )
Other, net |  |  | (0.8 | ) |  |  | 0.6 |  |  |  | 0.2 |
Effective tax rate |  |  | 29.0 | % |  |  | 25.1 | % |  |  | 22.8 | %
Components of Deferred Income Taxes | The components of deferred income taxes are as follows (in thousands):
|  | As of December 31, |
|  | 2022 |  |  | 2021 |
Non-deductible reserves and accruals |  | $ | 2,736 |  |  | $ | 1,567 |
Net operating loss and other carryforwards |  |  | 6,215 |  |  |  | 8,343 |
Stock compensation |  |  | 2,051 |  |  |  | 1,256 |
Lease liability |  |  | 17,715 |  |  |  | 20,870 |
Gross deferred tax asset |  |  | 28,717 |  |  |  | 32,036 |
Less - valuation allowance |  |  | (989 | ) |  |  | (1,114 | )
Sub-total |  |  | 27,728 |  |  |  | 30,922 |
Other liabilities |  |  | (807 | ) |  |  | (741 | )
Depreciation and amortization |  |  | (1,023 | ) |  |  | (1,962 | )
Goodwill and intangible assets |  |  | (18,648 | ) |  |  | (22,488 | )
Operating lease right-of-use assets |  |  | (13,705 | ) |  |  | (17,340 | )
Deferred commissions |  |  | (6,913 | ) |  |  | (8,268 | )
Net deferred tax liability |  | $ | (13,368 | ) |  | $ | (19,877 | )
Summary of Changes in Deferred Tax Valuation Allowance | The following table provides a summary of the changes in the deferred tax valuation allowance for the years ended December 31, 2022, 2021, and 2020 (in thousands):
|  | 2022 |  |  | 2021 |  |  | 2020 |
Deferred tax valuation allowance at January 1 |  | $ | 1,114 |  |  | $ | 1,237 |  |  | $ | 2,274 |
Additions |  |  | 106 |  |  |  | — |  |  |  | 52 |
Deductions |  |  | (336 | ) |  |  | (108 | ) |  |  | (1,134 | )
Change in tax legislation |  |  | 186 |  |  |  | — |  |  |  | 2 |
Translation adjustments |  |  | (81 | ) |  |  | (15 | ) |  |  | 43 |
Deferred tax valuation allowance at December 31 |  | $ | 989 |  |  | $ | 1,114 |  |  | $ | 1,237 |
Reconciliation of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is summarized as follows for the years ended December 31, 2022, 2021, and 2020 (in thousands):
|  | 2022 |  |  | 2021 |  |  | 2020 |
Unrecognized tax benefits at January 1 |  | $ | 5 |  |  | $ | 28 |  |  | $ | 345 |
Reductions for tax positions of prior years |  |  | (4 | ) |  |  | (24 | ) |  |  | (344 | )
Translation adjustments |  |  | (1 | ) |  |  | 1 |  |  |  | 27 |
Unrecognized tax benefits at December 31 |  | $ | — |  |  | $ | 5 |  |  | $ | 28 |

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