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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes |
12. | 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, 2020, 2019 and 2018:
|  | Years Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | (Amounts in thousands) |
Income before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Domestic |  | $ | 11,476 |  |  | $ | 6,787 |  |  | $ | 7,520 |
Foreign |  |  | 1,157 |  |  |  | 8,432 |  |  |  | 1,894 |
Income before income taxes |  | $ | 12,633 |  |  | $ | 15,219 |  |  | $ | 9,414 |
The Company has foreign subsidiaries which generate revenues from foreign clients. Additionally, the Company has foreign subsidiaries 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, 2020, 2019 and 2018:
|  | Years Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | (Amounts in thousands) |
Current provision: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 3,044 |  |  | $ | 1,555 |  |  | $ | 1,494 |
State |  |  | 752 |  |  |  | 406 |  |  |  | 273 |
Foreign |  |  | 797 |  |  |  | 751 |  |  |  | 807 |
Total current provision |  |  | 4,593 |  |  |  | 2,712 |  |  |  | 2,574 |
Deferred provision (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (1,340 | ) |  |  | (13 | ) |  |  | 317 |
State |  |  | (327 | ) |  |  | (4 | ) |  |  | 96 |
Foreign |  |  | (326 | ) |  |  | 1,372 |  |  |  | (264 | )
Total deferred provision (benefit) |  |  | (1,993 | ) |  |  | 1,355 |  |  |  | 149 |
Change in valuation allowance |  |  | 172 |  |  |  | 7 |  |  |  | — |
Total provision for income taxes |  | $ | 2,772 |  |  | $ | 4,074 |  |  | $ | 2,723 |
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, 2020, 2019 and 2018 were as follows:
|  | Years Ended December 31, |
(Amounts in thousands) |  | 2020 |  |  | 2019 |  |  | 2018 |
Income taxes computed at the federal statutory rate |  | $ | 2,653 |  |  |  | 21.0 | % |  | $ | 3,196 |  |  |  | 21.0 | % |  | $ | 1,977 |  |  |  | 21.0 | %
State income taxes, net of federal tax benefit |  |  | 602 |  |  |  | 4.7 |  |  |  | 404 |  |  |  | 2.7 |  |  |  | 387 |  |  |  | 4.1 |
Excess tax benefits from stock options/restricted shares |  |  | (920 | ) |  |  | (7.3 | ) |  |  | (9 | ) |  |  | (0.1 | ) |  |  | (93 | ) |  |  | (1.0 | )
Estimated charge for U.S. tax reform |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 251 |  |  |  | 2.7 |
Charge for global intangible low-taxed income (“GILTI”) |  |  | (20 | ) |  |  | (0.2 | ) |  |  | 69 |  |  |  | 0.5 |  |  |  | — |  |  |  | — |
Difference in tax rate on foreign earnings/other |  |  | 285 |  |  |  | 2.3 |  |  |  | 407 |  |  |  | 2.7 |  |  |  | 201 |  |  |  | 2.1 |
Change in valuation allowance |  |  | 172 |  |  |  | 1.4 |  |  |  | 7 |  |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | 2,772 |  |  |  | 21.9 | % |  | $ | 4,074 |  |  |  | 26.8 | % |  | $ | 2,723 |  |  |  | 28.9 | %
The components of the deferred tax assets and liabilities were as follows:
|  | At December 31, |
|  | 2020 |  |  | 2019 |
|  | (Amounts in thousands) |
Deferred tax assets: |  |  |  |  |  |  |  |
Allowance for doubtful accounts |  | $ | 101 |  |  | $ | 88 |
Accrued vacation and bonuses |  |  | 457 |  |  |  | 315 |
Stock-based compensation expense |  |  | 738 |  |  |  | 396 |
COVID-19 payroll tax deferment |  |  | 1,207 |  |  |  | — |
Acquisition-related transaction costs |  |  | 515 |  |  |  | 414 |
Net operating losses |  |  | 179 |  |  |  | 7 |
Total deferred tax assets |  |  | 3,197 |  |  |  | 1,220 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Prepaid expenses |  |  | 217 |  |  |  | 221 |
Depreciation, intangibles and contingent consideration |  |  | 2,005 |  |  |  | 2,017 |
Total deferred tax liabilities |  |  | 2,222 |  |  |  | 2,238 |
Valuation allowance |  |  | (179 | ) |  |  | (7 | )
Net deferred tax asset (liability) |  | $ | 796 |  |  | $ | (1,025 | )
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, 2020 is as follows:
|  | Years Ended December 31, |
(Amounts in thousands) |  | 2020 |  |  | 2019 |  |  | 2018 |
Unrecognized tax benefits, beginning balance |  | $ | 20 |  |  | $ | 263 |  |  | $ | 95 |
Additions related to current period |  |  | — |  |  |  | — |  |  |  | 208 |
Additions related to prior periods |  |  | — |  |  |  | — |  |  |  | — |
Reductions related to prior periods |  |  | (20 | ) |  |  | (243 | ) |  |  | (40 | )
Unrecognized tax benefits, ending balance |  | $ | — |  |  | $ | 20 |  |  | $ | 263 |
We evaluate deferred income taxes quarterly to determine if valuation allowances are required or should be adjusted. GAAP accounting guidance requires us to assess whether valuation allowances should be established against deferred tax assets based on all available evidence, both positive and negative using a “more likely than not” standard. Our assessment considers, among other things, the nature of cumulative losses; forecast of future profitability; the duration of statutory carry-forward periods and tax planning alternatives. At December 31, 2020, our valuation allowance was comprised of balances within locations of Singapore and the United Kingdom. The valuation allowance balances at these locations totaled $179,000 and $7,000 as of December 31, 2020 and 2019, respectively, and reflect net operating losses which may not be realizable in the future.

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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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