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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Taxes |
Income Taxes | Note 5‑ Income Taxes Under GAAP, we use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The components of earnings before income taxes for the years ended December 31, 2020 and 2019 were as follows:
|  | Year Ended
|  | December 31,
|  | 2020 |  | 2019
|  | (in thousands)
Income (loss) before income taxes: |  |  |  |  |  |
Domestic |  | $ | (859) |  | $ | (383)
Foreign |  |  | 877 |  |  | 208
|  | $ | 18 |  | $ | (175)
Income tax provision (benefit) consists of the following for the years ended December 31, 2020 and 2019:
|  | Year Ended
|  | December 31,
|  | 2020 |  | 2019
|  | (in thousands)
Income tax provision (benefit): |  |  |  |  |  |
Current |  |  |  |  |  |
Federal |  | $ | (190) |  | $ | 69
State |  |  | 1 |  |  | 2
Foreign |  |  | 194 |  |  | 155
Total current |  |  | 5 |  |  | 226
Deferred: |  |  |  |  |  |
Federal |  |  | (7) |  |  | 2
State |  |  | (86) |  |  | (2)
Foreign |  |  | (7) |  |  | 56
Total deferred |  |  | (100) |  |  | 56
Total income tax provision (benefit) |  | $ | (95) |  | $ | 282
A reconciliation of the income tax provision (benefit) by applying the statutory United States federal income tax rate to income (loss) before income taxes is as follows:
|  | Year Ended December 31, |
|  | 2020 |  | 2019 |
|  | $ |  | % |  | $ |  | % |
|  | (in thousands, except percentages) |
Federal income tax provision (benefit) at statutory rate |  | $ | 4 |  | 21.0 | % | $ | (37) |  | (21.0) | %
State tax expense net of federal tax benefit |  |  | (66) |  | (366.7) |  |  | (1) |  | (0.6) |
Foreign taxes |  |  | 24 |  | 133.3 |  |  | (4) |  | (2.3) |
Other |  |  | (57) |  | (316.7) |  |  | 75 |  | 42.9 |
Foreign withholding and dividend tax |  |  | — |  | — |  |  | 255 |  | 145.7 |
Change in valuation allowance |  |  | — |  | — |  |  | (6) |  | (3.4) |
Income tax provision (benefit) |  | $ | (95) |  | (527.8) | % | $ | 282 |  | (161.3) | %
Deferred tax assets and liabilities are recognized for future tax consequences between the carrying amounts of assets and liabilities and their respective tax basis using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Significant deferred tax assets and liabilities, consist of the following:
|  | December 31,
|  | 2020 |  | 2019
|  | (in thousands)
Deferred taxes, net |  |  |  |  |  |
Net operating loss carryforward |  | $ | 324 |  | $ | 236
Accruals |  |  | 22 |  |  | 11
Reserves |  |  | 11 |  |  | 8
Property, plant and equipment, and intangible assets |  |  | 28 |  |  | 48
Stock-based compensation expense |  |  | 132 |  |  | 125
Other |  |  | 10 |  |  | 7
Total deferred tax assets |  |  | 527 |  |  | 435
Valuation allowance |  |  | — |  |  | —
Net deferred tax assets |  | $ | 527 |  | $ | 435
Deferred taxes are recorded for the following net operating losses (“NOLs”) that can be used in future tax years:
|  | December 31,
|  | 2020 |  | 2019
|  | (in millions)
Net operating losses |  |  |  |  |  |
Federal |  | $ | 0.9 |  | $ | 0.8
State |  |  | 2.0 |  |  | 1.0
Foreign |  |  | 0.0 |  |  | 0.0
|  | $ | 2.9 |  | $ | 1.8
The federal and state NOLs expire at various dates between 2021 through 2040. Foreign NOLs are related to the jurisdictions of Singapore and Hong Kong and may be carried forward indefinitely. The Company experienced an ownership change under IRC Section 382 in February 2010. In general, a Section 382 ownership change occurs if there is a cumulative change in our ownership by “5% shareholders” (as defined in the Internal Revenue Code of 1986, as amended) that exceeds 50 percentage points over a rolling three-year period. An ownership change generally affects the rate at which NOLs and potential other deferred tax assets are permitted to offset future taxable income. Certain state jurisdictions within which we operate contain similar provisions and limitations. As of December 31, 2020, $33.5 million of the federal NOLs and $14.0 million of the state NOLs are subject to annual limitations due to the February 2010 ownership change, at approximately $71 thousand per year. Because these limitations preclude the use of a large portion of these NOLs, the Company permanently wrote-off the related deferred tax assets during the year ended December 31, 2015. Because the Company maintained a full valuation allowance against these deferred tax assets, this write-off had no impact on tax expense. At December 31, 2020, the gross NOLs without regard to this permanent write-off is $33.5 million for federal and $15.2 million for state. A roll-forward of the NOLs for which deferred tax assets are now recorded is as follows:
|  | Year Ended
|  | December 31,
|  | 2020 |  | 2019
|  | (in millions)
Net operating losses |  |  |  |  |  |
Balance at January 1, |  | $ | 1.8 |  | $ | 1.9
NOL generated (utilized) |  |  | 1.1 |  |  | (0.1)
NOL expired unused |  |  | — |  |  | —
Other, including changes in foreign exchange rates |  |  | — |  |  | —
Balance at December 31, |  | $ | 2.9 |  | $ | 1.8
Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets. We analyzed our need to record a valuation allowance against our otherwise recognizable net deferred tax assets in the federal, state and foreign jurisdictions and determined that no valuation allowance was necessary at December 31, 2020 or 2019. The Internal Revenue Code includes a provision, referred to as Global Intangible Low-Taxed Income (“GILTI”), which provides for a 10.5% tax on certain income of controlled foreign corporations. We have elected to account for GILTI as a period cost if and when occurred, rather than recognizing deferred taxes for basis differences expected to reverse. The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. U.S. federal income tax returns after 2016 remain open to examination. We and our subsidiaries are also subject to income tax in multiple state and foreign jurisdictions. Generally, state and foreign income tax returns after 2015 remain open to examination. No income tax returns are currently under examination. As of December 31, 2020 and 2019, the Company does not have any unrecognized tax benefits, and continues to monitor its current and prior tax positions for any changes. The Company recognizes penalties and interest related to unrecognized tax benefits as income tax expense. For the years ended December 31, 2020 and 2019, there were no penalties or interest recorded in income tax expense.

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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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