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Income Taxes

12 Months Ended

Dec. 31, 2019

11.	Income Taxes

The components of income before income

taxes

as shown in the accompanying Consolidated Statement of Operations, consisted of the following for the years ended December 31, 2019, 2018 and 2017:


	Years Ended December 31,
	2019		2018		2017
	(Amounts in thousands)
Income before income taxes:
Domestic	$	6,787	$	7,520	$	1,875
Foreign		8,432		1,894		1,073

Income before income taxes	$	15,219	$	9,414	$	2,948

The Company has foreign subsidiaries in Canada and India, both of which generate revenues from foreign clients. Additionally, the Company has foreign subsidiaries in Canada and India which provide services to its U.S. operations. Accordingly, the Company allocates a portion of its income to these subsidiaries based on a “transfer pricing” model and reports such income as foreign in the above table.

The provision for income taxes, as shown in the accompanying Consolidated Statement of Operations, consisted of the following for the years ended December 31, 2019, 2018 and 2017:


	Years Ended December 31,
	2019			2018			2017
	(Amounts in thousands)
Current provision:
Federal	$	1,555		$	1,494		$	1,101
State		406			273			159
Foreign		751			807			276

Total current provision		2,712			2,574			1,536

Deferred provision:
Federal		(13	)		317			(205	)
State		(4	)		96			(73	)
Foreign		1,379			(264	)		64

Total deferred provision		1,362			149			(214	)

Total provision for income taxes	$	4,074		$	2,723		$	1,322

The reconciliation of income taxes computed using our statutory U.S. income tax rate and the provision for income taxes for the years ended December 31, 2019, 2018 and 2017 were as follows:


	Years Ended December 31,
(Amounts in thousands)	2019					2018					2017
Income taxes computed at the federal statutory rate	$	3,196		21.0	%	$	1,977		21.0	%	$	1,002		34.0	%
State income taxes, net of federal tax benefit		404		2.7			387		4.1			116		3.9
Excess tax benefits from stock options/restricted shares		(9	)	(0.1	)		(93	)	(1.0	)		(140	)	(4.7	)
Estimated charge for U.S. tax reform		—		—			251		2.7			372		12.6
Charge for global intangible low-taxed income (“GILTI”)		69		0.5			—		—			—		—
Difference in tax rate on foreign earnings/other		414		2.7			201		2.1			(28	)	(1.0	)

	$	4,074		26.8	%	$	2,723		28.9	%	$	1,322		44.8	%

The components of the deferred tax assets and liabilities were as follows:


	At December 31,
	2019			2018
	(Amounts in thousands)
Deferred tax assets:
Allowance for doubtful accounts	$	88		$	109
Accrued vacation and bonuses		315			228
Stock-based compensation expense		396			194
Acquisition-related transaction costs		414			507

Total deferred tax assets		1,213			1,038

Deferred tax liabilities:
Prepaid expenses		221			186
Depreciation, intangibles and contingent consideration		2,017			555

Total deferred tax liabilities		2,238			741

Net deferred tax asset (liability)	$	(1,025	)	$	297

A reconciliation of the beginning and ending amounts of unrecognized tax benefits related to uncertain tax positions, including interest and penalties, for the three years ended December 31, 2019 is as follows:


	Years Ended December 31,
(Amounts in thousands)	2019			2018			2017
Unrecognized tax benefits, beginning balance	$	263		$	95		$	128
Additions related to current period		—			208			—
Additions related to prior periods		—			—			—
Reductions related to prior periods		(243	)		(40	)		(33	)

Unrecognized tax benefits, ending balance	$	20		$	263		$	95

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of December 31, 2019, 2018 and 2017, the Company had $5,000, $10,000 and $12,000, respectively, accrued for interest and penalties.