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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Note 10 – Income Taxes Income before income taxes consists of the following (in thousands):
|  | Years Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
Domestic |  | $ | (1,775 | ) |  | $ | (4,058 | ) |  | $ | 16,552 |
Foreign |  |  | 4,412 |  |  |  | 10,343 |  |  |  | 14,172 |
Total |  | $ | 2,637 |  |  | $ | 6,285 |  |  | $ | 30,724 |
The components of the income tax expense are as follows (in thousands):
|  | Years Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 2,874 |  |  | $ | 3,867 |  |  | $ | 9,349 |
State |  |  | 613 |  |  |  | 1,922 |  |  |  | 3,819 |
Foreign |  |  | 4,955 |  |  |  | 2,907 |  |  |  | 2,402 |
Total current |  |  | 8,442 |  |  |  | 8,696 |  |  |  | 15,570 |
Deferred: |  |  |  |  |  |  |  |  |
Federal |  |  | (636 | ) |  |  | (3,872 | ) |  |  | (5,513 | )
State |  |  | 763 |  |  |  | (1,597 | ) |  |  | (1,788 | )
Foreign |  |  | (185 | ) |  |  | 8 |  |  |  | 649 |
Total deferred |  |  | (58 | ) |  |  | (5,461 | ) |  |  | (6,652 | )
Income tax expense |  | $ | 8,384 |  |  | $ | 3,235 |  |  | $ | 8,918 |
A reconciliation of the federal statutory rate to Forrester’s effective tax rate is as follows:
|  | Years Ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
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 |  |  | 40.6 |  |  |  | 8.1 |  |  |  | 5.2 |
Foreign tax rate differential |  |  | 37.7 |  |  |  | 2.7 |  |  |  | (0.5 | )
Stock compensation |  |  | 66.6 |  |  |  | 17.5 |  |  |  | 0.9 |
Withholding taxes |  |  | 31.7 |  |  |  | 6.2 |  |  |  | 1.7 |
Non-deductible expenses |  |  | 23.1 |  |  |  | 8.1 |  |  |  | 1.5 |
Goodwill related to sale of FeedbackNow |  |  | 93.9 |  |  |  | — |  |  |  | — |
Permanent differences |  |  | (0.1 | ) |  |  | (1.7 | ) |  |  | (0.3 | )
Change in valuation allowance |  |  | 0.4 |  |  |  | 0.5 |  |  |  | 1.0 |
Foreign subsidiary income subject to U.S. tax |  |  | (1.6 | ) |  |  | 1.2 |  |  |  | 1.3 |
Foreign-derived intangible income benefit |  |  | 1.1 |  |  |  | (3.8 | ) |  |  | (0.7 | )
Change in tax legislation |  |  | — |  |  |  | (8.1 | ) |  |  | (1.6 | )
Foreign exchange gain (loss) on previously taxed earnings and profits |  |  | (0.5 | ) |  |  | 1.6 |  |  |  | — |
Currency translation gain (loss) |  |  | 3.6 |  |  |  | 0.7 |  |  |  | (0.1 | )
Other, net |  |  | 0.4 |  |  |  | (2.5 | ) |  |  | (0.4 | )
Effective tax rate |  |  | 317.9 | % |  |  | 51.5 | % |  |  | 29.0 | %
The significant items impacting the effective tax rate during 2024 as compared to 2023 are primarily due to 1) tax expense from the non-deductible goodwill related to the sale of the FeedbackNow product line of $2.5 million, 2) tax expense from the settlement of share-based awards of $1.8 million, 3) foreign withholding taxes of $0.8 million, and 4) state tax expense of $0.6 million related to the write-off of non-realizable state NOL carryforwards due to the dissolution of a domestic subsidiary. The components of deferred income taxes are as follows (in thousands):
|  | As of December 31, |
|  | 2024 |  |  | 2023 |
Non-deductible reserves and accruals |  | $ | 1,776 |  |  | $ | 3,077 |
Net operating loss and other carryforwards |  |  | 5,525 |  |  |  | 6,262 |
Stock compensation |  |  | 2,085 |  |  |  | 2,676 |
Depreciation and amortization |  |  | 3,485 |  |  |  | 435 |
Lease liability |  |  | 8,562 |  |  |  | 12,276 |
Gross deferred tax asset |  |  | 21,433 |  |  |  | 24,726 |
Less - valuation allowance |  |  | (1,055 | ) |  |  | (1,065 | )
Sub-total |  |  | 20,378 |  |  |  | 23,661 |
Other liabilities |  |  | (2,553 | ) |  |  | (733 | )
Goodwill and intangible assets |  |  | (13,837 | ) |  |  | (15,181 | )
Operating lease right-of-use assets |  |  | (5,822 | ) |  |  | (9,163 | )
Deferred commissions |  |  | (6,071 | ) |  |  | (6,545 | )
Net deferred tax liability |  | $ | (7,905 | ) |  | $ | (7,961 | )
As of December 31, 2024 and 2023, long-term net deferred tax assets wer e $0.8 million a nd $0.7 million, respectively, and are included in other assets in the Consolidated Balance Sheets. Long-term net deferred tax liabilities wer e $8.7 million at December 31, 2024 and 2023, and are included in non-current liabilities in the Consolidated Balance Sheets. As of December 31, 2024, the Company has fully utilized its U.S. federal net operating loss carryforwards. In addition, the Company has no U.S. federal or state capital loss carryforwards. The Company has foreign net operating loss carryfo rwards of approximately $17.4 million, which can be carried forward indefinitely. Approximately $3.2 million of the foreign ne t operating loss carryforwards relate to a prior acquisition, the utilization of which is subject to limitation under the tax law of the United Kingdom. The Company considers all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed for some portion or all of a net deferred income tax asset. Judgment is required in considering the relative impact of negative and positive evidence. In arriving at these judgments, the weight given to the potential effect of negative and positive evidence is commensurate with the extent to which it can be objectively verified. Although realization is not assured, based upon the Company’s historical taxable income and projections of the Company’s future taxable income over the periods during which the deferred tax assets are deductible and the carryforwards expire, management believes it is more likely than not that the Company will realize the benefits of these deductible differences, net of the existing valuation allowances, as discussed below. As of December 31, 2024 and 2023, the Company maintained a valuation allowance of approxim ately $1.1 mil lion, primarily relating to foreign net operating loss carryforwards from an acquisition, and as of December 31, 2022, also from U.S. capital losses from the Company’s investment in technology-related private equity funds. The following table provides a summary of the changes in the deferred tax valuation allowance for the years ended December 31, 2024, 2023, and 2022 (in thousands):
|  | 2024 |  |  | 2023 |  |  | 2022 |
Deferred tax valuation allowance at January 1 |  | $ | 1,065 |  |  | $ | 989 |  |  | $ | 1,114 |
Additions |  |  | 19 |  |  |  | 39 |  |  |  | 106 |
Deductions |  |  | (8 | ) |  |  | — |  |  |  | (336 | )
Change in tax legislation |  |  | — |  |  |  | (4 | ) |  |  | 186 |
Translation adjustments |  |  | (21 | ) |  |  | 41 |  |  |  | (81 | )
Deferred tax valuation allowance at December 31 |  | $ | 1,055 |  |  | $ | 1,065 |  |  | $ | 989 |
The Company will generally be free of additional U.S. federal tax consequences on additional unremitted foreign earnings that have been subject to U.S. tax or would be eligible for a dividends received deduction for earnings distributed after January 1, 2018. Notwithstanding the U.S. taxation of these amounts, the Company intends to continue to invest all of its unremitted earnings of $38.3 million, as we ll as the capital in these subsidiaries, indefinitely outside of the U.S. unless there are opportunities in the future to repatriate in a tax efficient manner. The Company does not expect to incur any material, additional taxes related to such amounts. The Company utilizes a two-step process for the measurement of uncertain tax positions that have been taken or are expected to be taken on a tax return. The first step is a determination of whether the tax position should be recognized in the financial statements. The second step determines the measurement of the tax position. A reconciliation of the beginning and ending amount of unrecognized tax benefits is summarized as follows for the years ended December 31, 2024, 2023, and 2022 (in thousands):
|  | 2024 |  |  | 2023 |  |  | 2022 |
Unrecognized tax benefits at January 1 |  | $ | — |  |  | $ | — |  |  | $ | 5 |
Reductions for tax positions of prior years |  |  | — |  |  |  | — |  |  |  | (4 | )
Translation adjustments |  |  | — |  |  |  | — |  |  |  | (1 | )
Unrecognized tax benefits at December 31 |  | $ | — |  |  | $ | — |  |  | $ | — |
The Company files income tax returns in the U.S. and in foreign jurisdictions. Generally, the Company is no longer subject to U.S., state, local, and foreign income tax examinations by tax authorities in its major jurisdictions for years before 2017, except to the extent of net operating loss and tax credit carryforwards from those years. Major taxing jurisdictions include the U.S., the Netherlands, the United Kingdom, Germany, and Switzerland. As of December 31, 2024, the Company has no jurisdictions under audit.

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