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Income Taxes
 3 Months Ended
Mar. 31, 2023
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, 2023, and 2022:
 
    
Three Months Ended

March 31,
  
    
2023
     
2022
  
               
    
(Amounts in thousands)
  
Income before income taxes:
 
Domestic
    $ 2,080      $ 3,315  
Foreign
      (1,601 )       (68 ) 
    
 
 
     
 
 
  
Income before income taxes
    $ 479      $ 3,247  
    
 
 
     
 
 
  
The Company has foreign subsidiaries which generate revenues from
non-U.S.-based
clients. Additionally, these subsidiaries provide services to the Company’s 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 Financial Statements, consisted of the following for the three months ended March 31, 2023, and 2022:
 
    
Three Months Ended

March 31,
  
    
2023
     
2022
  
               
    
(Amounts in thousands)
  
Current provision:
                  
Federal
    $ 711      $ 98  
State
      170        25  
Foreign
      (446 )       86  
    
 
 
     
 
 
  
Total current provision
      435        209  
    
 
 
     
 
 
  
Deferred provision (benefit):
                  
Federal
      (248 )       542  
State
      (60 )       137  
Foreign
      62        (56 ) 
    
 
 
     
 
 
  
Total deferred provision (benefit)
      (246 )       623  
    
 
 
     
 
 
  
Change in valuation allowance
      29        83  
    
 
 
     
 
 
  
Total provision for income taxes
    $ 218      $ 915  
    
 
 
     
 
 
  
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, 2023, and 2022 were as follows (amounts in thousands):
 
    
Three Months Ended

March 31, 2023
    
Three Months Ended

March 31, 2022
  
Income taxes computed at the federal statutory rate
    $ 100        21.0 %    $ 682        21.0 % 
State income taxes, net of federal tax benefit
      110        23.0       176        5.4  
Excess tax expense (benefits) from stock options/restricted shares
      23        4.8       (77 )       (2.4 ) 
Difference in tax rate on foreign earnings/other
      (44 )       (9.2 )      51        1.6  
Change in valuation allowance
      29        6.0       83        2.6  
    
 
 
     
 
 
    
 
 
     
 
 
  
     $ 218        45.6 %    $ 915        28.2 % 
    
 
 
     
 
 
    
 
 
     
 
 
  
 
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 March 31, 2023, our valuation allowance was comprised of balances within locations of Singapore, Ireland and the United Kingdom. The valuation allowance balances at these locations totaled $588,000 and $559,000 as of March 31, 2023 and December 31, 2022, respectively, and reflect net operating losses which may not be realizable in the future. In the third quarter of 2022, the Company decided to close the Singapore and Ireland operations.
The Company’s Canadian subsidiary is currently under audit by Revenue Canada for the years 2018 and 2019.