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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Taxes |
Income Taxes | 12. Income Taxes Income tax (benefit) expense from continuing operations and effective income tax rates consist of the following:
|  | December 31, |
|  | 2020 |  | 2019 |
Current taxes: |  |  |  |  |  |  |
Domestic |  | $ | (4,364) |  | $ | 2,490 |
Foreign |  |  | 16 |  |  | 15 |
|  |  | (4,348) |  |  | 2,505 |
Deferred taxes: |  |  |  |  |  |  |
Domestic |  |  | 1,043 |  |  | 969 |
Foreign |  |  | — |  |  | — |
|  |  | 1,043 |  |  | 969 |
Income tax (benefit) expense |  | $ | (3,305) |  | $ | 3,474 |
Income (loss) before income taxes |  |  |  |  |  |  |
Domestic income (loss) |  | $ | 12,790 |  | $ | (40) |
Foreign income (loss) |  |  | 95 |  |  | (1,479) |
Total |  | $ | 12,885 |  | $ | (1,519) |
Effective income tax rate |  |  | (25.6) | % |  | (228.7) | %
The effective income tax rate differs from the U.S. federal statutory income tax rate as follows:
|  | December 31, |
|  | 2020 |  | 2019 |
Tax at federal statutory rate |  | 21.0 | % | 21.0 | %
State income taxes |  | 5.3 |  | (50.3) |
Foreign taxes |  | — |  | (23.3) |
Tax benefit for U.K. sale |  | — |  | 154.8 |
Valuation allowance |  | (41.1) |  | (213.8) |
Unrecognized tax benefits |  | 5.6 |  | (15.5) |
Tax credits |  | (1.2) |  | (48.6) |
Permanent items |  | 4.0 |  | (54.1) |
Tax benefit CARES Act |  | (20.9) |  | — |
Other |  | 1.7 |  | 1.1 |
Effective income tax rate |  | (25.6) | % | (228.7) | %
The components of the deferred tax assets and liabilities are as follows:
|  | December 31, |
|  | 2020 |  | 2019 |
Deferred tax assets: |  |  |  |  |  |  |
Accrued expense |  | $ | 2,519 |  | $ | 2,854 |
Net operating loss carryforward |  |  | 524 |  |  | 1,216 |
Deferred financing costs |  |  | 260 |  |  | 400 |
Stock compensation |  |  | 935 |  |  | 892 |
Tax credit carryforward |  |  | 645 |  |  | 17 |
Interest limitation |  |  | 1,418 |  |  | 8,773 |
Lease liability |  |  | 1,899 |  |  | 1,728 |
Capital loss carryover |  |  | 2,030 |  |  | — |
Other |  |  | 2,598 |  |  | 669 |
Total gross deferred tax assets |  |  | 12,828 |  |  | 16,549 |
Valuation allowance |  |  | (2,615) |  |  | (5,659) |
Net deferred tax assets |  |  | 10,213 |  |  | 10,890 |
Deferred tax liabilities: |  |  |  |  |  |  |
Plant, equipment and leasehold improvements |  |  | (4,939) |  |  | (5,382) |
Intangible assets |  |  | (8,689) |  |  | (8,877) |
Right-of-use assets |  |  | (1,758) |  |  | (1,486) |
Prepaid expenses and other |  |  | (2,236) |  |  | (1,511) |
Total gross deferred tax liabilities |  |  | (17,622) |  |  | (17,256) |
Net deferred tax liabilities |  | $ | (7,409) |  | $ | (6,366) |
The net change in the valuation allowance during the year ended December 31, 2020 was a decrease of $3,044. The change was comprised primarily of a decrease due to Company’s election to apply the 2018 proposed regulations relating to the interest deduction limitation in section 163(j) of the Internal Revenue Code. This was partially offset by an increase related to the sale of certain foreign subsidiaries. The valuation allowance as of December 31, 2020, is relating to a capital loss realized on the sale of a foreign subsidiary whereby the Company does not anticipate a capital gain in the foreseeable future that would allow for the recognition of the capital loss carryover. In addition, the Company has a full valuation allowance related to a state net operating loss and a partial valuation allowance on a state interest limitation, both of which the Company estimates may not be fully utilized. In March 2020, the CARES Act was signed into law. The CARES Act allows companies with net operating losses (“NOLs”) originating in 2018, 2019, or 2020 to carry back those losses for five years and temporarily eliminates the tax law provision that limits the use of NOLs to 80% of taxable income. The CARES Act increases the Internal Revenue Code Section 163(j) interest deduction limit for 2019 and 2020, and allows for the acceleration of refunds of alternative minimum tax credits. For the year ended December 31, 2020, the Company recorded a tax benefit for certain provisions in the CARES Act resulting in a tax rate benefit of 20.9%. In addition, the Company reduced the partial valuation allowance due to the limitation on the deductibility of interest expense, and recorded an income tax rate benefit during for the year ended December 31, 2020 of 41.1%. Other items impacting the effective tax rate in 2020 include unrecognized tax benefits, permanent non-deductible items and tax credits. The Company no longer has any substantial potential tax benefits associated with gross foreign operating loss carryforwards due to the sale of its foreign subsidiaries. The Company has various state and local operating loss carryforwards which will expire at various dates from 2033 to 2038. The Company does expect to be able to utilize a portion of these losses prior to expiration. The Company’s income tax receivable on the consolidated balance sheet as of December 31, 2020, is primarily comprised of U.S. federal income tax refund claims attributable to the CARES Act provisions, including alternative minimum tax credits and allowance of NOL carrybacks. The Company has potential tax benefits associated with federal research and development tax credit carryforwards as of December 31, 2020 of $645, which will expire in 2036. The Company expects to be able to recognize these credit carryforwards, and accordingly has not provided a valuation allowance for the tax benefit. Additionally, the Company does not have any potential tax benefits associated with state research and development tax credit carryforwards as of December 31, 2020. At December 31, 2020, no provision has been made for U.S. federal and state taxes on cumulative foreign earnings as there are no current or cumulative earnings of foreign operations. The Company recorded no net current tax benefit in 2019 related to the sale of the Canadian operations. Unrecognized Tax Benefits Unrecognized tax benefits represent the aggregate tax effect of differences between the tax return positions and the amounts otherwise recognized in the Company’s consolidated financial statements, and are reflected in “Accrued expenses”, “Other long term liabilities” and “Deferred income taxes” in the Company’s consolidated balance sheets. The Company accounts for uncertain tax positions by recognizing the financial statement effects of a tax provision only when based upon the technical merits, it is “more-likely-than-not” that the tax position will be sustained upon examination.
Balance as of December 31, 2019 |  | $ | 2,172
Increase related to current year tax position |  |  | 72
Increase related to prior year tax position |  |  | 1,068
Balance as of December 31, 2020 |  | $ | 3,312
The Company recognizes interest and penalties with respect to unrecognized tax benefits as a component of income tax expense. The amount of accrued interest and penalties related to unrecognized tax benefits for the year ended December 31, 2020 was $255, and was $238 for the year ended December 31, 2019. The Company believes that it is reasonably possible that approximately $852 of its unrecognized tax benefits may be recognized by the end of 2021 as a result of settlement with the taxing authorities. As such, this balance is reflected in “Accrued expenses” in the Company’s consolidated balance sheet as of December 31, 2020. The Company is generally subject to potential federal and state examinations for the tax years on and after December 31, 2013 for federal purposes and December 31, 2016 for state purposes. The Company is subject to examinations for its U.K. subsidiaries for tax years ended on and after December 31, 2018. The Company's Canadian subsidiary which was sold April 1, 2019, is subject to examination for tax years ended on and after December 31, 2016.

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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=84230637&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=116825942&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=84230637&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=116825942&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=84230637&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 + Details
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