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Income Taxes | 12 Months Ended
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Dec. 31, 2016
IncomeTaxDisclosureTextBlockAbstract |
Income Taxes | INCOME TAXES The components of (loss) income before taxes for the years ended December 31 are as follows:
Origin of income before taxes |  | 2016 |  | 2015 |  | 2014
United States |  | $ | (13,016 | ) |  | $ | (9,763 | ) |  | $ | (25,142 | )
Foreign |  | (2,708 | ) |  | 1,140 |  |  | (661 | )
(Loss) before income taxes |  | $ | (15,724 | ) |  | $ | (8,623 | ) |  | $ | (25,803 | )
Significant components of income tax (benefit) expense for the years ended December 31 are as follows:
|  | 2016 |  | 2015 |  | 2014
Current: |  |  |  |  |  |
Federal |  | $ | 357 |  |  | $ | (1,155 | ) |  | $ | 158 |
State |  | — |  |  | 14 |  |  | (34 | )
Foreign |  | 105 |  |  | 120 |  |  | 1,108 |
Total current |  | 462 |  |  | (1,021 | ) |  | 1,232 |
Deferred: |  |  |  |  |  |
Federal |  | — |  |  | 4,143 |  |  | (7,260 | )
State |  | — |  |  | 548 |  |  | (959 | )
Foreign |  | 1,202 |  |  | 87 |  |  | (1,091 | )
Total deferred |  | 1,202 |  |  | 4,778 |  |  | (9,310 | )
Income tax (benefit) expense |  | $ | 1,664 |  |  | $ | 3,757 |  |  | $ | (8,078 | )
A reconciliation between the provision for income taxes calculated at the U.S. federal statutory income tax rate and the consolidated income tax expense in the consolidated statements of operations for the years ended December 31 is as follows:
|  | 2016 |  | 2015 |  | 2014
Provision at the U.S. federal statutory rate |  | (34.0 | )% |  | (34.0 | )% |  | (34.0 | )%
State taxes, net of federal benefit |  | (2.4 | )% |  | (5.2 | )% |  | (3.6 | )%
Foreign tax rate differential |  | — | % |  | (0.6 | )% |  | 0.1 | %
Valuation allowance |  | 42.7 | % |  | 72.3 | % |  | 1.2 | %
Other true up |  | 0.6 | % |  | 7.8 | % |  | (0.4 | )%
Intangible assets impairment and other non-deductibles |  | — | % |  | 2.2 | % |  | 5.9 | %
Other |  | 4.1 | % |  | 1.1 | % |  | (0.5 | )%
Income tax expense (benefit) effective rate |  | 11.0 | % |  | 43.6 | % |  | (31.3 | )%
The deferred tax assets and liabilities at December 31 are as follows:
|  | 2016 |  | 2015
Deferred tax assets: |  |  |  |
Stock compensation expense |  | $ | 2,624 |  |  | $ | 3,394 |
Goodwill |  | 2,235 |  |  | 2,673 |
Royalty accruals |  | 353 |  |  | 992 |
Intangible assets |  | 967 |  |  | — |
Bad debt allowance |  | 389 |  |  | 333 |
Inter-company interest expense accrual |  | 629 |  |  | 476 |
Net operating loss carryforwards |  | 5,485 |  |  | 1,576 |
Credit carry-forwards |  | 584 |  |  | 359 |
Inventory reserve |  | 318 |  |  | — |
Other |  | 399 |  |  | 637 |
Total deferred tax assets |  | 13,983 |  |  | 10,440 |
Deferred tax liabilities: |  |  |  |
Depreciation |  | (460 | ) |  | (777 | )
Intangible assets |  | — |  |  | (294 | )
Other |  | (344 | ) |  | (306 | )
Total deferred tax liabilities |  | (804 | ) |  | (1,377 | )
Net deferred tax asset before valuation allowance |  | 13,179 |  |  | 9,063 |
Valuation allowances for deferred tax assets |  | (13,179 | ) |  | (7,832 | )
Net deferred tax asset |  | $ | — |  |  | $ | 1,231 |
Net deferred tax assets and liabilities are recorded as follows within the consolidated balance sheets:
Current assets |  | $ | — |  |  | $ | 239 |
Long-term assets (liabilities) |  | — |  |  | 992 |
Net deferred tax asset |  | $ | — |  |  | $ | 1,231 |
The change in the valuation allowance for deferred tax assets for the years ended December 31 is as follows:
Year |  | Balance at January 1 |  | Charged to costs and expenses |  | (Deductions)/Other |  | Balance at December 31
2014 |  | $ | 1,833 |  |  | — |  |  | 173 |  |  | $ | 2,006 |
2015 |  | $ | 2,006 |  |  | 6,625 |  |  | (799 | ) |  | $ | 7,832 |
2016 |  | $ | 7,832 |  |  | 5,347 |  |  | — |  |  | $ | 13,179 |
For the years ended December 31, 2016, 2015, there were no exercises of stock options. For the year ended December 31, 2014, we recorded tax benefits from the exercise of stock options in the amount of $7. This amount was recorded as an increase in additional paid-in capital on the consolidated balance sheet and as cash from financing activities on the consolidated statements of cash flows. We also reduced the deferred tax asset related to stock-based compensation by $0 and $908 for fully vested options that expired unexercised and by $0 and $421 for the excess of stock-based compensation over the related tax benefit recognized for restricted stock units that vested during 2016 and 2015, respectively. These reductions in deferred tax assets were recorded against additional paid-in capital and had no impact on our results from operations. As required by ASC 740, we recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The following table summarizes our unrecognized tax benefit activity (excluding interest and penalties) during the years ended December 31, 2016, 2015 and 2014:
Description |  | 2016 |  | 2015 |  | 2014
Balance at beginning of period |  | $ | 140 |  |  | $ | 117 |  |  | $ | 65 |
Increases in positions taken in a current period |  | — |  |  | 38 |  |  | 52 |
Decreases due to settlements |  | (140 | ) |  | (15 | ) |  | — |
Balance at end of period |  | $ | — |  |  | $ | 140 |  |  | $ | 117 |
We recognize interest and penalties related to unrecognized tax benefits in income tax expense for all periods presented. There were no interest and penalties recognized in income tax expense during the years ended December 31, 2016, 2015 and 2014. The total amount of unrecognized tax benefits as of December 31, 2016, 2015 and 2014, including interest and penalties, was $0, $140 and $117, respectively, all of which if ultimately recognized will reduce our annual effective tax rate. None of the unrecognized tax benefit will be recognized into income in 2016 due to the lapsing of statutes of limitations. We are subject to income taxes in the U.S. federal jurisdiction, and various states and foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for the years before 2013. Management periodically estimates our probable tax obligations using historical experience in tax jurisdictions and informed judgments. There are inherent uncertainties related to the interpretation of tax regulations in the jurisdictions in which we transact business. The judgments and estimates made at a point in time may change based on the outcome of tax audits, as well as changes to or further interpretations of regulations. If such changes take place, there is a risk that the tax rate may increase or decrease in any period. Tax accruals for tax liabilities related to potential changes in judgments and estimates for both federal and state tax issues are included in current liabilities on the consolidated balance sheet. The investment in our foreign subsidiaries is considered to be indefinite in duration and therefore we have not provided a provision for deferred U.S. income taxes on the unremitted earnings from those subsidiaries. A provision has not been established because it is not practicable to determine the amount of unrecognized deferred tax liability for such unremitted foreign earnings and because it is our present intention to reinvest the undistributed earnings indefinitely. As required by ASC 740, a valuation allowance must be established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. At December 31, 2016, we recorded a full valuation allowance of $1,268 on our China deferred tax assets since we cannot anticipate when or if we will have sufficient taxable income to utilize the deferred tax assets in the future. We have approximately $8,981 of US net operating loss carryforwards available to offset future US taxable income as of December 31, 2016. The net operating loss carry-forwards related to tax losses generated in prior years in the US begin to expire in 2035. Further, we have tax loss carry-forwards of approximately $4,209 available to offset future foreign income in Italy as of December 31, 2016. We have recorded a full valuation allowance against the resulting $1,158 deferred tax asset because we cannot anticipate when or if this entity will have taxable income sufficient to utilize the net operating losses in the future. There is no expiration of the net operating loss carry-forwards related to tax losses generated in prior years in Italy. Effective beginning April 1, 2016, Fuel Tech prospectively adopted ASU 2015-17, "Balance Sheet Classification of Deferred Taxes" and as a result classified all deferred tax assets and liabilities as non-current.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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