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14. Income Tax

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Tax

The Company files a consolidated federal income tax return including all its domestic subsidiaries. State tax returns are filed on a consolidated, combined or separate basis depending on the applicable laws relating to the Company and its subsidiaries.

Current income tax expense for the years ended December 31, 2019 and 2018 consisted of $8 thousand and $7 thousand, respectively of state and local taxes. Foreign deferred tax expense for the years ended December 31, 2019 and 2018 consisted of approximately $1.1 million and none, respectively.

		2019				2018
Current:
Federal		$	-			$	-
State and Local			8				7
Foreign			-				-
		$	8			$	7
Deferred:
Federal		$	-			$	-
State and Local			-				-
Foreign			1,123				-
Income tax expense		$	1,131			$	7

The Company recorded an approximate $1.1 million deferred tax liability as of December 31, 2019 that is recorded in other long term liabilites in the Consolidated Balance Sheets. The deferred tax liability resulted as India subsidiary had income for the year ended December 31, 2019. U.S. loss and foreign income (loss) before income taxes are as follows:

		Year Ended December 31,
		2019				2018
United States loss		$	(43,419	)		$	(36,129	)
Foreign income (loss)			5,073				(151	)
Total pretax loss		$	(38,346	)		$	(36,280	)

Income tax benefit differs from the amounts computed by applying the statutory U.S. federal income tax rate (21%) to loss before income taxes as a result of the following:

		Year Ended December 31,
		2019				2018
Income tax (benefit) at the federal statutory rate		$	(8,052	)		$	(7,619	)
State tax (benefit)			(48	)			(632	)
Foreign tax differential			900				450
Stock-based compensation			133				150
Interest Expense			478				-
GILTI Inclusion			849				97
Other			166				(47	)
Prior year true-ups			1,493				-
Valuation Allowance			5,212				7,608

Income Tax Expense		$	1,131			$	7
Effective Tax Rate			-2.95	%			-0.02	%

The components of the net deferred tax asset or (liability) are as follows:

		Year Ended December 31,
		2019				2018
Deferred tax Assets:
Organization, Startup and Intangible Assets		$	3,997			$	4,723
Stock Based Compensation			328				301
NOLs and R&D Credits			53,400				56,270
Interest expense carryover			9,131				4,722
Ethanol Credits			1,500				1,500
Other, net			2,622				450
Total deferred tax assets			70,978				67,966
Valuation Allowance			(59,547	)			(54,335	)
Net deferred tax assets			11,431				13,631

Deferred tax liabilities:
Property, Plant, and Equipment			(12,554	)			(13,631	)
Total deferred tax liabilities			(12,554	)			(13,631	)
Net deferred tax liabilities		$	(1,123	)		$	-

The Company does not provide for U.S. income taxes for any undistributed earnings of the Company’s foreign subsidiaries, as the Company considers these permanently reinvested in the operations of such subsidiaries and have a cumulative foreign loss. At December 31, 2019 and 2018, these undistributed losses totaled $7.0 million, and $12.1 million, respectively. If any earnings were distributed, some countries may impose withholding taxes. Following the passage of the 2017 U.S. Tax Cuts and Jobs Act, the U.S. imposed a transition tax on the accumulated earnings of the Company’s foreign subsidiaries through December 31, 2017. Since the foreign subsidiaries have a cumulative loss, there was no U.S. federal tax impact related to the transition tax. Not all future earnings of the foreign subsidiaries will be subject to U.S. income taxes as the U.S. has moved to a modified territorial system for tax years beginning after December 31, 2017. Finally, due to the Company’s overall deficit in foreign cumulative earnings and its U.S. loss position, the Company does not believe a material net unrecognized U.S. deferred tax liability exists.

In 2018 and 2019, the U.S. imposed a tax on Global Intangible Low-Taxed Income “GILTI” which imposes a tax on foreign income in excess of a deemed return on tangible assets of a foreign corporation. The Company has evaluated this provision and recognized an inclusion of $0.4 million and $4.0 million of income for the years ended December 31, 2018 and 2019, respectively, in relation to GILTI. This inclusion decreased the Company’s net loss. Due to the Company’s overall deficit in foreign cumulative earnings and its U.S. loss position, the Company does not believe a material net unrecognized U.S. deferred tax liability exists.

ASC 740 Income Taxes provides that the tax effects from an uncertain tax position can be recognized in the Company’s financial statements only if the position is more-likely-than-not of being sustained on audit, based on the technical merits of the position. Tax positions that meet the recognition threshold are reported at the largest amount that is more-likely-than-not to be realized. This determination requires a high degree of judgment and estimation. The Company periodically analyzes and adjusts amounts recorded for the Company’s uncertain tax positions as events occur to warrant adjustment when the statutory period for assessing tax on a given tax return, period expire or if tax authorities provide administrative guidance or a decision is rendered in the courts. The Company does not reasonably expect the total amount of uncertain tax positions to significantly increase or decrease within the next 12 months. As of December 31, 2019, the Company’s uncertain tax positions were not significant for income tax purposes.

We conduct business globally and, as a result, one or more of the Company’s subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world, including such major jurisdictions as India, Mauritius, and the United States. The Company files a U.S. federal income tax return and tax returns in three U.S. states, as well as in two foreign jurisdictions. Penalties and interest are classified as general and administrative expenses.

The following describes the open tax years, by major tax jurisdiction, as of December 31, 2019:

United States — Federal		2007 – present
United States — State		2008– present
India		2010 – present
Mauritius		2006 – present

As of December 31, 2019, the Company had U.S. federal NOL carryforwards of approximately $197.1 million and state NOL carryforwards of approximately $213.4 million. The Company also has approximately $1.5 million of alcohol and cellulosic biofuel credit carryforwards. As of December 31, 2019, the federal NOL’s of $195.1 million and the state NOL’s of $213.4 million expire on various dates between 2027 and 2039. Due to the 2017 U.S. Tax Reform, U.S. federal NOLs post 2017 in the amount of $2.0 million have no expiration date. Under the current tax law, net operating loss and credit carryforwards available to offset future income in any given year may be limited by U.S. or India statute regarding net operating loss carryforwards and timing of expirations or upon the occurrence of certain events, including significant changes in ownership interests. The Company’s India subsidiary has net operating loss carryforwards as of December 31, 2019 of approximately $1.9 million in U.S. dollars, which expire through December 31, 2026.