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Income Taxes | 12 Months Ended
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Dec. 31, 2015
Income Taxes [Abstract] |
Income Taxes | 11.INCOME TAXES The Company’s provision for income taxes is summarized as follows:
|  | For the year
Amounts in thousands |  | ended December 31,
|  |  | 2015 |  |  | 2014 |  |  | 2013
U.S. Federal - Current |  | $ | 84 |  | $ | (13) |  | $ | 25
U.S. Federal - Deferred |  |  | 0 |  |  | 0 |  |  | 0
Provision for U.S. federal income taxes |  | $ | 84 |  | $ | (13) |  | $ | 25
Foreign - Current |  | $ | 3,056 |  | $ | 1,931 |  | $ | 1,616
Foreign - Deferred |  |  | (1,305) |  |  | (411) |  |  | (348)
Provision for foreign income taxes |  |  | 1,751 |  |  | 1,520 |  |  | 1,268
Total provision for income taxes |  | $ | 1,835 |  | $ | 1,507 |  | $ | 1,294
The Company’s effective income tax rate differs from the statutory federal income tax rate as follows:
Amounts in thousands | 2015 | 2014 | 2013
U.S. Federal income tax statutory rate | 34.0% | 34.0% | 34.0%
Foreign income taxes | (17.5%) | 68.0% | (18.5%)
Equity in Polish investment | 0.0% | 0.0% | (5.4%)
State income tax (net of federal benefit) | 0.0% | (15.0%) | (0.3%)
Meals, entertainment, gifts & giveaways | 1.0% | 38.7% | 1.8%
Statutory to GAAP adjustments, including foreign currency | (1.2%) | (283.9%) | (3.0%)
Valuation allowance | (15.8%) | 532.4% | 5.7%
Unrecognized tax benefit | 4.1% | 0.0% | 0.0%
Stock options | 3.6% | 0.0% | 0.0%
Tax authority audit adjustment | 3.4% | 0.0% | 0.0%
Permanent and other items | 0.4% | (14.6%) | 3.3%
Total provision for income taxes | 12.0% | 359.7% | 17.6%
The Company’s current year effective income tax rate was impacted due to a loss in the United States, as well as increased pre-tax income in Canada, Poland and Mauritius. The comparison of pre-tax income of $15.3 million for the year ended December 31, 2015, compared to pre-tax income of $0.4 million for the year ended December 31, 2014 should be considered when comparing tax rates year over year. The overall effective tax rate of 12.0% wa s partially driven by jurisdictions with losses that we re not offset by tax benefits as a result of valuation allowances recorded against such losses as well as the full release of the valuation allowance in Austria. A majority of the earnings recognized by the Company during the year ended December 31, 201 5 were from the Company’s properties in Canada. Based on permanent items and the impact of foreign currency exchange rates the earnings in the Company’s Canadian properties accounted for nearly 81% of the total tax expense recorded. There was no tax benefit recorded on the significant losses at the Company’s properties in the United States as those amounts are fully valued and no benefit can be recognized. The Company records deferred tax assets and liabilities based on the difference between the financial statement and income tax basis of assets and liabilities using the enacted statutory tax rate in effect for the year these differences are expected to be taxable or reversed. Deferred income tax expenses or credits are based on the changes in the asset or liability from period to period. The recorded deferred tax assets are reviewed for impairment on a quarterly basis by reviewing the Company’s internal estimates for future taxable income. The Company assesses the continuing need for a valuation allowance that results from uncertainty regarding its ability to realize the benefits of the Company’s deferred tax assets. The Company has a valuation allowance of $6.0 million on its U.S. deferred tax assets and a valuation allowance of $2.0 million on the deferred tax assets of one of its Canadian properties as of December 31, 2015 due to the uncertainty of future taxable income. During 2015, t he Company released its $1.5 million Austrian valuation allowance on CCE’s deferred tax assets resulting in a tax benefit. The Company analyzed the likelihood of future realization of its deferred tax assets, including recent cumulative earnings by taxing jurisdiction, expectations of future taxable income or loss, the amount of net operating loss carryforwards not subject to limitations, the number of periods it will take to realize the net operating loss carryforwards and other relevant factors. Based on this analysis, the Company concluded that its Austrian operations had attained a sustained level of profitability sufficient to reduce its valuation allowance in that jurisdiction. The ultimate realization of deferred income tax assets depends on generation of future taxable income in the jurisdictions where the assets are located during the periods in which those temporary differences become deductible. If the Company concludes that its prospects for the realization of its deferred tax assets are more likely than not, the Company will then reduce its valuation allowance as appropriate and credit income tax. The Company’s deferred income taxes at December 31, 2015 and 2014 are summarized as follows:
Amounts in thousands |  |  | 2015 |  |  | 2014
Deferred tax assets (liabilities) - U.S. Federal and state: |  |  |  |  |  |
Deferred tax assets - current: |  |  |  |  |  |
Accrued liabilities and other |  | $ | 167 |  | $ | 184
Deferred tax (liabilities) - current: |  |  |  |  |  |
Prepaid expenses |  |  | (153) |  |  | (157)
Valuation allowance |  |  | (163) |  |  | (179)
Net deferred tax (liabilities) - current |  |  | (149) |  |  | (152)
Deferred tax assets - non-current: |  |  |  |  |  |
Amortization of goodwill for tax |  |  | 368 |  |  | 421
Amortization of startup costs |  |  | 232 |  |  | 275
Property and equipment |  |  | 672 |  |  | 1,059
NOL carry forward |  |  | 4,260 |  |  | 3,752
Accrued liabilities and other |  |  | 444 |  |  | 409
Total deferred tax assets - non-current |  |  | 5,976 |  |  | 5,916
Valuation allowance |  |  | (5,827) |  |  | (5,764)
Net deferred tax assets - non-current |  |  | 149 |  |  | 152
Total deferred tax assets - U.S. federal and state |  | $ | 0 |  | $ | 0
Deferred tax assets (liabilities) - foreign |  |  |  |  |  |
Deferred tax assets - current: |  |  |  |  |  |
NOL carryforward |  | $ | 0 |  | $ | 0
Other |  |  | 305 |  |  | 300
Deferred tax (liabilities) - current: |  |  |  |  |  |
Other |  |  | 0 |  |  | 0
Net deferred tax assets - current |  |  | 305 |  |  | 300
Deferred tax assets - non-current: |  |  |  |  |  |
Property and equipment |  |  | 705 |  |  | 1,521
NOL carryforward |  |  | 3,375 |  |  | 4,583
Tax credits |  |  | 72 |  |  | 199
Accrued liabilities and other |  |  | 478 |  |  | 1,329
Contingent liability |  |  | 719 |  |  | 0
Exchange rate gain or (loss) |  |  | 1,326 |  |  | 821
Deferred tax (liabilities) - non-current: |  |  |  |  |  |
Property and equipment |  |  | (2,722) |  |  | (2,204)
Contingent liability |  |  | 0 |  |  | (985)
Exchange rate (loss) |  |  | (363) |  |  | 0
Others |  |  | (396) |  |  | (230)
Valuation allowance |  |  | (1,990) |  |  | (5,129)
Net deferred tax assets (liabilities) - non-current |  |  | 1,204 |  |  | (95)
Total deferred tax assets - foreign |  | $ | 1,509 |  | $ | 205
Net deferred tax assets |  | $ | 1,509 |  | $ | 205
The Company has analyzed filing positions in all of the U.S. federal, state and foreign jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The Company has identified its U.S. federal tax return, its state tax return in Colorado and its foreign tax returns in Canada, Poland and South Africa, where it previously owned and operated casinos, as “major” tax jurisdictions, as defined by the Code. The Canadian Taxing Authority is currently conducting an income tax audit of CDR. The Company maintains a full valuation allowance on all tax attributes related to CDR and, as a result, any adjustment made by the taxing authority will have no net impact on the effective tax rate. The Canadian Taxing Authority is also conducting an audit of the Company’s Edmonton property. The Company does not maintain a valuation allowance related to Edmonton and, as a result, any adjustment by the taxing authority could have an impact on the effective tax rate. The Company’s tax returns for the following periods are subject to examination:
Jurisdiction: |  | Periods |
U.S. Federal |  | 2007-2014 |
U.S. State - Colorado |  | 2005-2014 |
Canada |  | 2011-2014 |
South Africa |  | 2009 |
Poland |  | 2013-2014 |
Austria |  | 2010-2014 |
The Company had income tax net operating loss carryforwards related to its domestic and international operations of approximately $26.3 million as of December 31, 2015. The Company had recorded $8.3 million of deferred tax assets related to the net operating loss carryforwards, excluding the impact of the adjustment of unrecognized tax benefits. The deferred tax assets expire as follows:
Amounts in thousands |  |  |
2026 - 2030 |  | $ | 2,874
2031 - 2035 |  |  | 5,162
No expiration |  |  | 222
Total deferred tax assets |  | $ | 8,258
The Company believes it is more likely than not that the benefit from certain federal, state and foreign net operating loss carryforwards will not be realized. In recognition of this risk, we have provided a valuation allowance on the deferred tax assets related to the federal, state and foreign net operating loss carryforwards. If or when recognized, the tax benefits related to any reversal of the valuation allowance on deferred tax assets would be accounted for as a reduction of income tax. As of December 31, 2015, the Company had recorded $6.3 million in valuation allowances related to net operating loss deferred tax assets. Certain net operating loss carryforwards in the Company’s filed income tax returns include unrecognized tax benefits. The deferred tax assets recognized for those net operating loss carryforwards are presented net of these unrecognized tax benefits. As of December 31, 2015, the Company had undistributed foreign earnings of approximately $49.2 million that it considers indefinitely reinvested and, as of December 31, 2015, the Company had not provided for taxes for these undistributed foreign earnings. Based on the Company’s capital, debt and liquidity position, there is no expected need for cash repatriation from foreign subsidiaries, and all cash held in foreign jurisdictions is considered permanently reinvested. These earnings could become subject to income taxes if they are remitted as dividends, are loaned to the Company or any of the Company’s subsidiaries located in the United States, or if the Company sells its stock in the foreign subsidiaries. However, the Company believes that any additional taxes could be offset, in part or in whole, by foreign tax credits. The Company has recognized a $0.7 million tax liability for an uncertain tax position on foreign tax return s. This adjustment has been recorded as a component of taxes payable in the accompanying consolidated balance sheet as of December 31, 2015. The Company may, from time to time, be assessed interest or penalties by major tax jurisdictions, although any such assessments historically have been minimal and immaterial to our financial results. The Company’s total amount of unrecognized tax benefit is summarized in the table below:
Amounts in thousands |  | 2015 |  | 2014
Unrecognized tax benefit - January 1 |  | $ | 61 |  | $ | 146
Gross increases - tax positions in prior period |  |  | 623 |  |  | 0
Gross decreases - tax positions in prior period |  |  | 0 |  |  | 0
Gross increases - tax positions in current period |  |  | 0 |  |  | 0
Settlements |  |  | 0 |  |  | 0
Lapse of statute of limitations |  |  | 0 |  |  | (85)
Unrecognized benefit - December 31 |  | $ | 684 |  | $ | 61
The Company increased its unrecognized tax benefit in 2015. The increase relates to an out-of-period reclassification of a prior year valuation allowance to a current year unrecognized tax benefit. The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. Related to the unrecognized tax benefits noted above, the Company accrued penalties and interest of less than $0.1 million during 2015 and 2014. I n total, for each of the years ended December 31, 2015 and 2014, the Company recognized a liability of less than $0.1 million. T he $0.7 million balance of unrecognized tax benefits, if recognized, would affect the effective tax rate. The Company’s U.S. and foreign pre-tax income is summarized in the table below:
Amounts in thousands |  | 2015 |  | 2014 |  | 2013
Income (loss) before taxes: |  |  |  |  |  |  |  |  |
U.S. |  | $ | (1,593) |  | $ | (3,205) |  | $ | (397)
Foreign |  |  | 16,935 |  |  | 3,623 |  |  | 7,766
Total income before taxes |  | $ | 15,342 |  | $ | 418 |  | $ | 7,369

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 + Details
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