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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.