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Note 6 - Income Taxes
 3 Months Ended
Mar. 31, 2021
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

6.

INCOME TAXES

 

Our effective tax rate for the three-month periods ended March 31, 2021 and March 31, 2020 was 24.2% and 22.9%, respectively. The period-over-period change was primarily attributable to the geographic mix of earnings.

 

As of December 31, 2020, we have domestic net operating loss (“NOL”) carryforwards of $47,755, which expire 2021 thru 2035, and domestic tax credits of $2,070, which expire 2028 thru 2039, available to reduce future taxable income.  As of March 31, 2021, management has concluded it is more likely than not that these domestic NOL and credit carryforwards will be fully utilized. 

 

As of March 31, 2021, for certain past operations in the U.K., we continue to report a valuation allowance for NOL carryforwards of approximately $11,000, nearly all of which can be carried forward indefinitely. Utilization of the net operating losses may be limited due to the change in the past U.K. operation and cannot currently be used to reduce taxable income at our other U.K. subsidiary, Accutronics Ltd.  There are no other deferred tax assets related to the past U.K. operations.

 

As of March 31, 2021, we have not recognized a valuation allowance against our other foreign deferred tax assets, as realization is considered to be more likely than not.

 

As of March 31, 2021, the Company maintains its assertion that all foreign earnings will be indefinitely reinvested in those operations, other than earnings generated in the U.K.

 

There were no unrecognized tax benefits related to uncertain tax positions at March 31, 2021 and December 31, 2020.

 

As a result of our operations, we file income tax returns in various jurisdictions including U.S. federal, U.S. state and foreign jurisdictions.  We are routinely subject to examination by taxing authorities in these various jurisdictions.  In August 2020, the Internal Revenue Service (“IRS”) completed its examination of the Company’s federal tax returns for 2016-2018 with no material adjustments identified.  Our U.S. tax matters for 2019 and 2020 remain subject to IRS examination.  Our U.S. tax matters for 2001, 2002, 2005-2007 and 2011-2015 also remain subject to IRS examination due to the remaining availability of NOL carryforwards generated in those years. Our U.S. tax matters for 2001, 2002, 2005-2007 and 2011-2020 remain subject to examination by various state and local tax jurisdictions. Our tax matters for the years 2010 through 2020 remain subject to examination by the respective foreign tax jurisdiction authorities.