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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes

(4) Income Taxes

The provisions for income taxes are:

 

 

2023

 

 

2022

 

 

2021

 

Current:

 

 

 

 

 

 

 

 

 

Federal

 

$

8,038

 

 

$

7,439

 

 

$

6,684

 

State

 

 

1,211

 

 

 

2,173

 

 

 

2,149

 

Foreign

 

 

3,238

 

 

 

3,943

 

 

 

1,106

 

 

 

 

12,487

 

 

 

13,555

 

 

 

9,939

 

Deferred:

 

 

—

 

 

 

 

 

 

 

Federal

 

 

(6,263

)

 

 

(2,763

)

 

 

(2,369

)

State

 

 

(1,029

)

 

 

(1,243

)

 

 

(1,039

)

Foreign

 

 

(2,417

)

 

 

(988

)

 

 

1,635

 

 

 

 

(9,709

)

 

 

(4,994

)

 

 

(1,773

)

Total

 

$

2,778

 

 

$

8,561

 

 

$

8,166

 

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:

 

 

2023

 

 

2022

 

 

2021

 

Computed tax expense at statutory federal rates

 

$

2,162

 

 

$

7,553

 

 

$

5,619

 

Increase (decrease) in taxes resulting from:

 

 

 

 

 

 

 

 

 

State taxes, net of federal income tax benefit

 

 

756

 

 

 

1,493

 

 

 

1,485

 

Unrecognized tax benefits

 

 

(585

)

 

 

(1,441

)

 

 

(1,783

)

Bargain purchase gain on business acquisition

 

 

—

 

 

 

—

 

 

 

(35

)

Income tax credits

 

 

(720

)

 

 

(1,342

)

 

 

(1,206

)

Foreign tax rate differential

 

 

1,025

 

 

 

785

 

 

 

262

 

Stock based compensation

 

 

219

 

 

 

55

 

 

 

208

 

Global intangible low-taxed income

 

 

685

 

 

 

—

 

 

 

162

 

Change in valuation allowance

 

 

1,376

 

 

 

379

 

 

 

3,304

 

Return to provision

 

 

158

 

 

 

(693

)

 

 

(651

)

Nondeductible expenses / (tax deductions)

 

 

(327

)

 

 

989

 

 

 

(103

)

Gross receipts taxes

 

 

425

 

 

 

602

 

 

 

567

 

IP migration

 

 

(2,455

)

 

 

—

 

 

 

—

 

Other

 

 

59

 

 

 

181

 

 

 

337

 

Total

 

$

2,778

 

 

$

8,561

 

 

$

8,166

 

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

 

 

2023

 

 

2022

 

 

2021

 

Domestic

 

$

6,672

 

 

$

28,739

 

 

$

21,212

 

International

 

 

3,625

 

 

 

7,226

 

 

 

5,929

 

Total

 

$

10,297

 

 

$

35,965

 

 

$

27,141

 

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, 2023 and 2022 relate to the following:

 

 

2023

 

 

2022

 

Deferred tax assets

 

 

 

 

 

 

Inventories

 

$

2,764

 

 

$

2,401

 

Program accrual

 

 

9,742

 

 

 

8,277

 

Vacation pay accrual

 

 

864

 

 

 

772

 

Accrued bonuses

 

 

37

 

 

 

1,707

 

Bad debt expense

 

 

2,143

 

 

 

1,450

 

Stock compensation

 

 

1,536

 

 

 

1,414

 

Domestic NOL carryforward

 

 

543

 

 

 

609

 

Foreign NOL carryforward

 

 

6,322

 

 

 

2,554

 

Tax credits

 

 

1,582

 

 

 

842

 

Lease liability

 

 

5,812

 

 

 

6,209

 

Accrued expenses

 

 

696

 

 

 

570

 

Unrealized foreign exchange loss

 

 

(1,182

)

 

 

3,220

 

Capitalized R&D costs

 

 

7,140

 

 

 

4,600

 

Deferred tax assets

 

 

37,999

 

 

 

34,625

 

Less valuation allowance

 

 

(3,317

)

 

 

(3,853

)

Deferred tax assets, net

 

$

34,682

 

 

$

30,772

 

Deferred tax liabilities

 

 

 

 

 

 

Plant and equipment, principally due to differences in depreciation and capitalized interest

 

$

32,336

 

 

$

36,158

 

Lease assets

 

 

5,617

 

 

 

6,079

 

Prepaid expenses

 

 

1,406

 

 

 

1,685

 

Deferred revenue

 

 

—

 

 

 

777

 

Other

 

 

366

 

 

 

529

 

Deferred tax liabilities

 

$

39,725

 

 

$

45,228

 

 

 

 

 

 

 

 

Total net deferred tax liabilities

 

$

5,043

 

 

$

14,456

 

 

As of December 31, 2023, the Company maintained a full valuation allowance against its net deferred income tax assets related to the Company’s operations in Brazil, Spain, Singapore, and Ukraine totaling $3,317. The valuation allowance decreased by $536 for the year ended December 31, 2023, of which $1,912 relates to unrealized foreign exchange gains and foreign currency translation included in other comprehensive income for 2023, and $1,376 included in the provision for income taxes for 2023. As of December 31, 2022, the Company recorded a full valuation allowance against the net deferred income tax assets related to the Company’s operations in Brazil, Spain, and Ukraine totaling $3,853, of which $379 is included in the provision for income taxes for 2022 and $788 related to unrealized foreign exchange gains included in other comprehensive income for 2022.

 

Gross foreign NOLs related to the Company's foreign operations were $19,699 and $8,342, for the years ended December 31, 2023 and 2022, respectively. Substantially all of the Company’s foreign NOLs can be carried forward indefinitely.

Gross domestic federal and state NOLs available across all jurisdictions in which we operate were $3,598 and $3,622 as of December 31, 2023 and 2022, respectively. The Company’s federal and state NOLs expire over varying intervals in the future and are subject to annual limitation in accordance with IRC Section 382.

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, 2023 and 2022 included in other liabilities on the Company’s consolidated balance sheets:

 

 

 

2023

 

 

2022

 

Balance at beginning of year

 

$

2,006

 

 

$

2,426

 

Additions for tax positions related to the current year

 

 

230

 

 

 

225

 

Additions for tax positions related to the prior years

 

 

302

 

 

 

5

 

Reduction for tax positions related to the prior years

 

 

(799

)

 

 

(745

)

Effect of exchange rate changes

 

 

57

 

 

 

95

 

Balance at end of year

 

$

1,796

 

 

$

2,006

 

 

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. As of December 31, 2023, 2022, and 2021 the Company incurred $1,342, $2,161, and $2,909, respectively in interest and penalties related to unrecognized tax benefits on its consolidated balance sheets.

It is expected that the amount of unrecognized tax benefits will change and $304 of unrecognized tax benefits is expected to be released within the next twelve months due to expiration of the statute of limitations.

The Company believes it is more likely than not that the deferred assets detailed in the table above, exclusive of those in Brazil, Spain, Singapore and Ukraine with the previously mentioned full valuation allowances, will be realized in the normal course of business. It is the intent of the Company that undistributed earnings of foreign subsidiaries that amounted to $78,600 at December 31, 2023, are permanently reinvested. 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 2020 through 2022 tax years. State income tax returns are subject to examination for the 2019 through 2022 tax years. The Company has foreign income tax returns subject to examination.

Beginning in 2022, The Tax Cuts and Jobs Act of 2017 ("TCJA"), requires taxpayers to capitalize and amortize research and development expenditures pursuant to Internal Revenue Code, or IRC, Section 174, which resulted in increases in the Company’s deferred tax asset balance of $7,140 as of December 31, 2023. There was an increase in cash tax payments in the amount of $3,344 and $6,180 for the years ended December 31, 2023 and December 31, 2022, respectively.