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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes

(4) Income Taxes

The provisions for income taxes are:

 

 

 

2021

 

 

2020

 

 

2019

 

Current:

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

6,684

 

 

$

(1,197

)

 

$

(235

)

State

 

 

2,149

 

 

 

(3

)

 

 

(151

)

Foreign

 

 

1,106

 

 

 

2,831

 

 

 

2,956

 

Deferred:

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

 

(2,369

)

 

 

2,177

 

 

 

2,867

 

State

 

 

(1,039

)

 

 

403

 

 

 

1,548

 

Foreign

 

 

1,635

 

 

 

(1,131

)

 

 

(1,783

)

Total

 

$

8,166

 

 

$

3,080

 

 

$

5,202

 

 

Total income tax expense differed from the amounts computed by applying the U.S. Federal income tax rate of 21.0% to income before income tax expense, as a result of the following:

 

 

 

2021

 

 

2020

 

 

2019

 

Computed tax expense at statutory federal rates

 

$

5,619

 

 

$

3,874

 

 

$

3,993

 

Increase (decrease) in taxes resulting from:

 

 

 

 

 

 

 

 

 

 

 

 

State taxes, net of federal income tax benefit

 

 

1,485

 

 

 

559

 

 

 

1,131

 

Unrecognized tax benefits

 

 

(1,783

)

 

 

(2,092

)

 

 

263

 

Bargain purchase gain on business acquisition

 

 

(35

)

 

 

(978

)

 

 

—

 

Income tax credits

 

 

(1,206

)

 

 

(812

)

 

 

(819

)

Foreign tax rate differential

 

 

262

 

 

 

2,145

 

 

 

341

 

Stock based compensation

 

 

208

 

 

 

377

 

 

 

366

 

Global intangible low-taxed income

 

 

162

 

 

 

—

 

 

 

249

 

Change in valuation allowance

 

 

3,304

 

 

 

—

 

 

 

—

 

Other

 

 

150

 

 

 

7

 

 

 

(322

)

Total

 

$

8,166

 

 

$

3,080

 

 

$

5,202

 

 

Income before provision for income taxes and losses on equity investments are:

 

 

 

2021

 

 

2020

 

 

2019

 

Domestic

 

$

21,212

 

 

$

11,858

 

 

$

15,465

 

International

 

 

5,929

 

 

 

6,589

 

 

 

3,547

 

Total

 

$

27,141

 

 

$

18,447

 

 

$

19,012

 

 

 

Temporary differences between the consolidated financial statements’ carrying amounts and tax bases of assets and liabilities that give rise to significant portions of the net deferred tax liability at December 31, 2021 and 2020 relate to the following:

 

 

 

2021

 

 

2020

 

Deferred tax asset

 

 

 

 

 

 

 

 

Inventories

 

$

1,777

 

 

$

1,416

 

Program accrual

 

 

9,098

 

 

 

7,306

 

Vacation pay accrual

 

 

792

 

 

 

815

 

Accrued bonuses

 

 

1,250

 

 

 

589

 

Bad debt expense

 

 

1,361

 

 

 

952

 

Stock compensation

 

 

1,532

 

 

 

2,079

 

Domestic NOL carryforward

 

 

675

 

 

 

708

 

Foreign NOL carryforward

 

 

1,718

 

 

 

1,434

 

Tax credits

 

 

807

 

 

 

931

 

Lease liability

 

 

6,718

 

 

 

3,378

 

Accrued expenses

 

 

723

 

 

 

347

 

Unrealized foreign exchange loss

 

 

3,847

 

 

 

2,798

 

Other

 

 

744

 

 

 

735

 

Deferred tax asset

 

$

31,042

 

 

$

23,488

 

Less valuation allowance

 

 

(4,262

)

 

 

—

 

Deferred tax asset, net

 

$

26,780

 

 

$

23,488

 

Deferred tax liability

 

 

 

 

 

 

 

 

           Plant and equipment, principally due to differences in

           depreciation and capitalized interest

 

$

37,113

 

 

$

36,878

 

Lease assets

 

 

6,600

 

 

 

3,332

 

Prepaid expenses

 

 

1,666

 

 

 

1,508

 

Deferred revenue

 

 

1,014

 

 

 

874

 

Other

 

 

123

 

 

 

1,692

 

Deferred tax liability

 

$

46,516

 

 

$

44,284

 

 

 

 

 

 

 

 

 

 

Total net deferred tax liability

 

$

19,736

 

 

$

20,796

 

 

As of December 31, 2021, we recorded a full valuation allowance against the net deferred income tax assets related to the Company’s operations in Brazil totaling $4,262, of which $3,304 is included in the provision for income taxes for 2021 and $958 related to unrealized foreign exchange losses for 2021 included in other comprehensive income for 2021. There was no valuation allowance as of December 31, 2020.

 

Gross foreign NOLs were $5,491 and $5,021 for the year ended December 31, 2021 and 2020, respectively. Substantially all of the Company’s foreign NOLs can be carried forward indefinitely.

 

Gross federal and state NOLs available across all jurisdictions in which we operate were $3,733 and $3,994 as of December 31, 2021 and 2020, respectively. The Company’s federal and state NOLs expire over varying intervals in the future.

 

The following is a roll-forward of the Company’s total gross unrecognized tax benefits, not including interest and penalties, for the years ended December 31, 2021 and 2020 included in other liabilities, excluding current installments on the Company’s consolidated balance sheets:

 

 

 

2021

 

 

2020

 

Balance at beginning of year

 

$

3,222

 

 

$

4,395

 

Additions for tax positions related to the current year

 

 

223

 

 

 

159

 

Additions for tax positions related to the prior years

 

 

56

 

 

 

16

 

Reduction for tax positions related to the prior years

 

 

(971

)

 

 

(841

)

Effect of exchange rate changes

 

 

(104

)

 

 

(507

)

Balance at end of year

 

$

2,426

 

 

$

3,222

 

 

 

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Company’s consolidated financial statements. For the years ended December 31, 2021, 2020, and 2019 the Company had recognized a balance of approximately $2,909, $4,195, and $6,528 respectively in interest and penalties related to unrecognized tax benefits.

It is expected that the amount of unrecognized tax benefits will change and $1,699 of unrecognized tax benefits is expected to be released within the next twelve months due to expiration of statute of limitations.

The Company believes it is more likely than not that the deferred tax assets detailed in the table above, exclusive of those in Brazil with the previously mentioned full valuation allowance, will be realized in the normal course of business. It is the intent of the Company that undistributed earnings of foreign subsidiaries are permanently reinvested. The amount of undistributed earnings was $12,741 as of December 31, 2021. Upon distribution of earnings in the form of dividends or otherwise, the Company may still be subject to state income taxes and withholding taxes payable to the various foreign countries. Determination of the unrecognized deferred tax liability is not practical due to the complexities of a hypothetical calculation.

The Company is subject to U.S. federal income tax as well as to income tax in multiple state jurisdictions. Federal income tax returns of the Company are subject to Internal Revenue Service (“IRS”) examination for the 2018 through 2020 tax years.  State income tax returns are subject to examination for the 2017 through 2020 tax years. The Company has foreign income tax returns subject to examination.

The Mississippi Department of Revenue has completed its audit of the Company’s state income tax returns for the years ended December 31, 2016 through December 31, 2018. The proposed adjustment for the period is immaterial.

On November 9, 2018, the Company completed the purchase of all the outstanding shares of TyraTech, Inc., a loss corporation. The Company obtained approximately $3,971 of usable federal net operating losses through the acquisition. The Internal Revenue Code of 1986, as amended, imposes restrictions on the utilization of NOLs in the event of an “ownership change” of a corporation. During 2019, the Company completed the Section 382 analysis and determined that the utilization of the losses is subject to an annual limitation of $162, with an additional $890 of net operating losses available over the first five years after the ownership change.

On October 2, 2020, the Company completed the acquisition of all outstanding stock of the Agrinos Group Companies (Agrinos), except for Agrinos AS. Agrinos has operating entities in the U.S., Mexico, India, Brazil, China, Ukraine, and Spain. Agrinos, Inc., an U.S. corporation with operating losses. The Company obtained approximately $126 of usable federal net operating losses through the acquisition. The Internal Revenue Code of 1986, as amended, imposes restrictions on the utilization of NOLs in the event of an “ownership change” of a corporation. During 2021, the Company completed an analysis and determined that the potential annual limitation on the Company’s utilization of the losses is insignificant.