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Income Taxes
 3 Months Ended
Mar. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes
10.
Income Taxes
The components of income before income taxes, as shown in the accompanying Financial Statements, consisted of the following for the three months ended March 31, 2022, and 2021:
                 
    
Three Months Ended

March 31,
  
    
2022
     
2021
  
               
    
(Amounts in thousands)
  
Income before income taxes:
 
Domestic
    $  3,315      $  1,881  
Foreign
      (68 )       (244 ) 
    
 
 
     
 
 
  
Income before income taxes
    $ 3,247      $ 1,637  
    
 
 
     
 
 
  
The Company has foreign subsidiaries outside the United States, which generate revenues from
non-US
based clients. Additionally, these subsidiaries provide services to the Company’s U.S. parents. 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 Financial Statements, consisted of the following for the three months ended March 31, 2022, and 2021:
                 
    
Three Months Ended

March 31,
  
    
2022
     
2021
  
               
    
(Amounts in thousands)
  
Current provision:
                  
Federal
    $ 98      $  358  
State
      25        93  
Foreign
      86        10  
    
 
 
     
 
 
  
Total current provision
      209        461  
    
 
 
     
 
 
  
Deferred provision (benefit):
                  
Federal
      542        (6 ) 
State
      137        (2 ) 
Foreign
      (56 )       (42 ) 
    
 
 
     
 
 
  
Total deferred provision (benefit)
      623        (50 ) 
    
 
 
     
 
 
  
Change in valuation allowance
      83        32  
    
 
 
     
 
 
  
Total provision for income taxes
    $  915      $ 443  
    
 
 
     
 
 
  
The reconciliation of income taxes computed using the statutory U.S. income tax rate and the provision for income taxes for the three months ended March 31, 2022, and 2021 were as follows (amounts in thousands):
                                 
    
Three Months Ended

March 31, 2022
    
Three Months Ended

March 31, 2021
  
              
Income taxes computed at the federal statutory rate
    $  682        21.0 %    $  344        21.0 % 
State income taxes, net of federal tax benefit
      176        5.4       104        6.3  
Excess tax benefits from stock options/restricted shares
      (77 )       (2.4 )      (67 )       (4.1 ) 
Difference in tax rate on foreign earnings/other
      51        1.6       30        1.9  
Change in valuation allowance
      83        2.6       32        2.0  
    
 
 
     
 
 
    
 
 
     
 
 
  
     $ 915        28.2 %    $ 443        27.1 % 
    
 
 
     
 
 
    
 
 
     
 
 
  
 
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; forecasts of future profitability; the duration of statutory carry-forward periods; and tax planning alternatives. As of March 31, 2022, our valuation allowance was comprised of balances within locations of Singapore and the United Kingdom. The valuation allowance balances at these locations totaled $394,000 and $311,000 as of March 31, 2022, and December 31, 2021, respectively, and reflect net operating losses which may not be realizable in the future.
The Company’s Canadian subsidiary are currently under audit by Revenue Canada for the years 2018 and 2019.