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Income Taxes | 6 Months Ended
--- | ---
Jun. 30, 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 and six months ended June 30, 2022 and 2021:
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
|  | (Amounts in thousands) |  |  | (Amounts in thousands) |
Income before income taxes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Domestic |  | $ | 3,858 |  |  | $ | 5,566 |  |  | $ | 7,173 |  |  | $ | 7,447 |
Foreign |  |  | (242 | ) |  |  | (399 | ) |  |  | (310 | ) |  |  | (643 | )
Income before income taxes |  | $ | 3,616 |  |  | $ | 5,167 |  |  | $ | 6,863 |  |  | $ | 6,804 |
The Company has subsidiaries organized in jurisdictions outside the United States, which generate revenues from non-U.S.-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 and six months ended June 30, 2022 and 2021:
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
|  | (Amounts in thousands) |  |  | (Amounts in thousands) |
Current provision (benefit): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 932 |  |  | $ | 901 |  |  | $ | 1,030 |  |  | $ | 1,259 |
State |  |  | 234 |  |  |  | 211 |  |  |  | 259 |  |  |  | 304 |
Foreign |  |  | (35 | ) |  |  | (26 | ) |  |  | 51 |  |  |  | (16 | )
Total current provision (benefit) |  |  | 1,131 |  |  |  | 1,086 |  |  |  | 1,340 |  |  |  | 1,547 |
Deferred provision (benefit): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (58 | ) |  |  | 293 |  |  |  | 484 |  |  |  | 287 |
State |  |  | (12 | ) |  |  | 70 |  |  |  | 125 |  |  |  | 68 |
Foreign |  |  | (2 | ) |  |  | (57 | ) |  |  | (58 | ) |  |  | (99 | )
Total deferred provision (benefit) |  |  | (72 | ) |  |  | 306 |  |  |  | 551 |  |  |  | 256 |
Change in valuation allowance |  |  | 121 |  |  |  | 37 |  |  |  | 204 |  |  |  | 69 |
Total provision for income taxes |  | $ | 1,180 |  |  | $ | 1,429 |  |  | $ | 2,095 |  |  | $ | 1,872 |
The reconciliation of income taxes computed using the statutory U.S. income tax rate and the provision for income taxes for the three and six months ended June 30, 2022 and 2021 were as follows (amounts in thousands):
|  | Three Months Ended June 30, 2022 |  |  | Three Months Ended June 30, 2021 |
Income taxes computed at the federal statutory rate |  | $ | 759 |  |  |  | 21.0 | % |  | $ | 1,085 |  |  |  | 21.0 | %
State income taxes, net of federal tax benefit |  |  | 210 |  |  |  | 5.8 |  |  |  | 277 |  |  |  | 5.4 |
Excess tax benefit from stock options/restricted shares |  |  | 68 |  |  |  | 1.9 |  |  |  | 19 |  |  |  | 0.4 |
Difference in income tax rate on foreign earnings/other |  |  | 22 |  |  |  | 0.6 |  |  |  | 11 |  |  |  | 0.2 |
Change in valuation allowance |  |  | 121 |  |  |  | 3.3 |  |  |  | 37 |  |  |  | 0.7 |
|  | $ | 1,180 |  |  |  | 32.6 | % |  | $ | 1,429 |  |  |  | 27.7 | %
|  | Six Months Ended June 30, 2022 |  |  | Six Months Ended June 30, 2021 |
Income taxes computed at the federal statutory rate |  | $ | 1,441 |  |  |  | 21.0 | % |  | $ | 1,429 |  |  |  | 21.0 | %
State income taxes, net of federal tax benefit |  |  | 386 |  |  |  | 5.6 |  |  |  | 381 |  |  |  | 5.6 |
Excess tax benefit from stock options/restricted shares |  |  | (9 | ) |  |  | (0.1 | ) |  |  | (48 | ) |  |  | (0.7 | )
Difference in income tax rate on foreign earnings/other |  |  | 73 |  |  |  | 1.0 |  |  |  | 41 |  |  |  | 0.6 |
Change in valuation allowance |  |  | 204 |  |  |  | 3.0 |  |  |  | 69 |  |  |  | 1.0 |
|  | $ | 2,095 |  |  |  | 30.5 | % |  | $ | 1,872 |  |  |  | 27.5 | %
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 June 30, 2022, our valuation allowance was comprised of balances within locations of Singapore, the United Kingdom and Ireland. The valuation allowance balances at these locations totaled $515,000 and $311,000 as of June 30, 2022 and December 31, 2021, respectively, and reflect net operating losses which may not be realizable in the future. The Company’s Canadian subsidiary is currently under audit by Revenue Canada for the years 2018 and 2019.

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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 https://asc.fasb.org/extlink&oid=121826272&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 https://asc.fasb.org/extlink&oid=122134291&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 https://asc.fasb.org/extlink&oid=121826272&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 https://asc.fasb.org/extlink&oid=122134291&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 https://asc.fasb.org/extlink&oid=121826272&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 https://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 https://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 https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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