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Income Taxes | 12 Months Ended
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Dec. 31, 2017
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,
﻿ |  |  | 2017 |  |  | 2016 |  |  | 2015
﻿U.S. Federal - Current |  | $ | 1,283 |  | $ | 85 |  | $ | 84
﻿U.S. Federal - Deferred |  |  | (786) |  |  | 0 |  |  | 0
﻿Provision for U.S. federal income taxes |  | $ | 497 |  | $ | 85 |  | $ | 84
﻿ |  |  |  |  |  |  |  |  |
﻿Foreign - Current |  | $ | 3,094 |  | $ | 1,898 |  | $ | 2,875
﻿Foreign - Deferred |  |  | 969 |  |  | (196) |  |  | (1,305)
﻿Provision for foreign income taxes |  |  | 4,063 |  |  | 1,702 |  |  | 1,570
﻿Total provision for income taxes |  | $ | 4,560 |  | $ | 1,787 |  | $ | 1,654
﻿ ﻿ The Company’s effective income tax rate differs from the statutory federal income tax rate as follows: ﻿ ﻿
﻿ |  |  |
﻿Amounts in thousands | 2017 | 2016 | 2015
﻿U.S. Federal income tax statutory rate | 35.0% | 34.0% | 34.0%
﻿Foreign income taxes | (9.1%) | (10.0%) | (17.6%)
﻿Equity in Polish investment | 0.0% | 0.0% | 0.0%
﻿State income tax (net of federal benefit) | 2.4% | 0.2% | 0.0%
﻿Meals, entertainment, gifts & giveaways | 2.0% | 1.1% | 1.0%
﻿Statutory to GAAP adjustments, including foreign currency | 2.8% | 0.5% | (1.2%)
﻿Valuation allowance | (45.9%) | (17.4%) | (16.5%)
﻿Unrecognized tax benefit | 0.1% | 0.0% | 4.3%
﻿Stock options | 1.6% | 1.6% | 3.4%
﻿Tax authority audit adjustment | 0.0% | 0.0% | 3.6%
﻿Tax Act impact | 43.5% | 0.0% | 0.0%
﻿Permanent and other items | 4.2% | 1.5% | 0.3%
﻿Total provision for income taxes | 36.6% | 11.5% | 11.3%
﻿ The Company’s current year effective income tax rate was impacted by a decrease in pre-tax income in Canada, Mauritius and Poland. The comparison of pre-tax income of $12.5 million for the year ended December 31, 2017, compared to pre-tax income of $15.6 million for the year ended December 31, 2016 should be considered when comparing tax rates year over year. The overall effective tax rate of 36.6% was significantly driven by the full release of the U.S. valuation allowance in 2017 and the Tax Act. A majority of the earnings recognized by the Company during the year ended December 31, 2017 were from the Company’s properties in Canada, which accounted for 47.6% of the total tax expense recorded. ﻿ The Tax Act, which was enacted on December 22, 2017, makes significant changes to the Internal Revenue Code effective for 2018, although certain provisions affected the Company’s 2017 financial results. The changes impacting 2017 results include, but are not limited to, the write-down of net deferred tax assets resulting from the reduction in the U.S. federal corporate income tax rate from 35% to 21% and imposing a one-time deemed transition tax on certain unremitted earnings of foreign subsidiaries. Due to the complexities involved in accounting for the enactment of the Tax Act, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the income tax effects of the Tax Act. SAB 118 provides a measurement period that may not extend beyond one year from the Tax Act enactment date to complete the accounting for the impact of the Tax Act. SAB 118 allows the Company to provide provisional estimates of the impact of the Tax Act in its financial statements for the year ended December 31, 2017. The Company has not completed its analysis of the tax impact resulting from the enactment of the Tax Act and the provisional amounts will be refined as needed during the measurement period allowed by SAB 118. While the Company believes that it has made reasonable estimates of the impact of the U.S. corporate income tax rate reduction and the one-time deemed transition tax on unremitted earnings of foreign subsidiaries, these estimates could change as the Company continues to analyze IRS guidance related to the Tax Act as it is released. Further changes could result as the Company refines its calculations surrounding the remeasurement of its deferred tax balances, as well as its calculations of earnings and profits as used in the computation of the transition tax. ﻿ Provisional amounts ﻿
| · |  | Deferred tax assets and liabilities: The Company remeasured deferred tax assets and liabilities using the rates at which they are expected to reverse in the future, which would be a blended rate of 24.66%, comprised of a 21% federal rate and a 3.66% state income tax rate net of federal benefit. The provisional amounts recorded for the remeasurement of the Company's deferred tax assets and liabilities was an income tax expense of $0.3 million. However, this remeasurement is based on estimates as of the enactment date of the Tax Act and the Company’s current analysis of the numerous complex tax law changes in the Tax Act. As the Company finalizes its analysis of the tax law changes in the Tax Act, including the impact on its current year tax return filing positions, the Company will update provisional amounts for this remeasurement. Additionally, due to the size and nature of the one-time transition tax, any change in the one-time transition tax provisional estimate could directly impact the remeasurement of deferred tax assets and liabilities.
﻿
| · |  | U.S. taxation on foreign earnings: A key component of the Tax Act includes a one-time transition tax applied to foreign earnings that were not previously subject to U.S. tax. This one-time transition tax is based on total post-1986 foreign earnings and profits that were previously deferred from U.S. income taxes. The Company recorded a provisional amount of $5.1 million for the one-time transition tax liability based on its estimates of post-1986 foreign earnings and profits. Previously, the Company had not recorded a deferred tax liability related to these post-1986 foreign earnings because management did not expect to repatriate these earnings and subject them to U.S. taxation due to the nature of the Company’s foreign operations. Because the Tax Act does not address certain aspects of the calculation of the transition tax, leaving them open to interpretation, the U.S. Treasury Department is expected to issue regulations to provide clarification on calculating the transition tax. Additionally, the Company continues to gather post-1986 foreign earnings and profits support as well as substantiation for historical tax pool data, which will impact the provisional amount. The Company expects to update its provisional amount following the issuance of regulations on the Tax Act by the U.S. Treasury Department and additional data gathering efforts.
﻿ The Tax Act creates a new requirement that certain income, such as global intangible low-taxed income (“GILTI”), earned by a controlled foreign corporation (“CFC”) must be included currently in the gross income of the CFC’s U.S. shareholder, effective in 2018. Because of the complexity of the new GILTI tax rules, the Company is continuing to evaluate this provision of the Tax Act. Under U.S. GAAP, the Company is allowed to make an accounting policy choice of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current period expense when incurred (the “period cost method”) or (2) factoring such amounts into the Company’s measurement of its deferred taxes (the “deferred method”). The Company’s selection of an accounting policy with respect to the new GILTI tax rules will depend, in part, on analyzing its global income to determine whether it expects to have future U.S. inclusions in taxable income related to GILTI and, if so, what the impact is expected to be. Because whether the Company expects to have future U.S. inclusions in taxable income related to GILTI depends not only on its current structure and estimated future results of global operations but also its intent and ability to modify its structure and/or business, the Company is not yet able to reasonably estimate the effect of this provision of the Tax Act. Therefore, the Company has not made any adjustments related to potential GILTI tax in its financial statements for the period ended December 31, 2017, and the Company has not made a policy choice regarding whether to record deferred taxes on GILTI. The Company will continue to analyze the effects of the Tax Act on its financial statements. Additional impacts from the enactment of the Tax Act will be recorded as they are identified during the measurement period as allowed in SAB 118. ﻿ 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. During 2017, the Company released its $5.7 million U.S. valuation allowance on its U.S. deferred tax assets, resulting in a tax benefit. The Company analyzed the likelihood of future realization of the U.S. 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 operations in the U.S. had attained a sustained level of profitability sufficient to reduce its valuation allowance. ﻿ 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’s deferred income taxes at December 31, 2017 and 2016 are summarized as follows: ﻿ ﻿
﻿ |  |  |  |  |  |
﻿Amounts in thousands |  |  | 2017 |  |  | 2016
﻿Deferred tax assets (liabilities) - U.S. Federal and state: |  |  |  |  |  |
﻿ |  |  |  |  |  |
﻿Deferred tax assets |  |  |  |  |  |
﻿Amortization of goodwill for tax |  | $ | 175 |  | $ | 316
﻿Amortization of startup costs |  |  | 98 |  |  | 190
﻿Property and equipment |  |  | 433 |  |  | 593
﻿NOL carryforward |  |  | 51 |  |  | 4,167
﻿Accrued liabilities and other |  |  | 172 |  |  | 668
﻿ |  |  | 929 |  |  | 5,934
﻿Valuation allowance |  |  | 0 |  |  | (5,717)
﻿ |  | $ | 929 |  | $ | 217
﻿Deferred tax liabilities |  |  |  |  |  |
﻿Prepaid expenses |  | $ | (143) |  | $ | (217)
﻿ |  | $ | (143) |  | $ | (217)
﻿ |  |  |  |  |  |
﻿ |  |  |  |  |  |
﻿Long-term deferred tax asset (liability) |  | $ | 786 |  | $ | 0
﻿ |  |  |  |  |  |
﻿Deferred tax assets (liabilities) - foreign |  |  |  |  |  |
﻿ |  |  |  |  |  |
﻿Deferred tax assets |  |  |  |  |  |
﻿Property and equipment |  | $ | 675 |  | $ | 715
﻿ NOL carryforward |  |  | 2,745 |  |  | 2,806
﻿ Tax credits |  |  | 0 |  |  | 0
﻿Accrued liabilities and other |  |  | 1,046 |  |  | 943
﻿Contingent liability |  |  | 348 |  |  | 684
﻿Exchange rate gain or (loss) |  |  | 762 |  |  | 819
﻿ |  |  | 5,576 |  |  | 5,967
﻿Valuation allowance |  |  | 0 |  |  | 0
﻿ |  | $ | 5,576 |  | $ | 5,967
﻿Deferred tax liabilities |  |  |  |  |  |
﻿Property and equipment |  | $ | (2,786) |  | $ | (2,609)
﻿Exchange rate gain or (loss) |  |  | (95) |  |  | (10)
﻿Intangibles |  |  | (1,317) |  |  | (1,229)
﻿Others |  |  | (642) |  |  | (414)
﻿ |  | $ | (4,840) |  | $ | (4,262)
﻿ |  |  |  |  |  |
﻿ |  |  |  |  |  |
﻿Long-term deferred tax asset (liability) |  | $ | 736 |  | $ | 1,705
﻿ |  |  |  |  |  |
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 and Poland as “major” tax jurisdictions, as defined by the Code. ﻿ The Canadian Taxing Authority is currently conducting an income tax audit of CRA. The Company does not maintain a valuation allowance related to CRA and, as a result, any adjustment made by the taxing authority could have an impact on the effective tax rate. ﻿ The Company’s income tax returns for the following periods are subject to examination: ﻿
﻿ |  |  |
﻿ |  |  |
﻿Jurisdiction: |  | Periods |
﻿U.S. Federal |  | 2007-2016 |
﻿U.S. State - Colorado |  | 2005-2016 |
﻿Canada |  | 2011-2016 |
﻿Mauritius |  | 2014-2016 |
﻿Poland |  | 2009-2016 |
﻿Austria |  | 2012-2016 |
﻿United Kingdom |  | N/A |
﻿ The Company had income tax net operating loss carryforwards related to its domestic and international operations of approximately $14.9 million as of December 31, 2017. The Company had recorded $3.5 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 |  | $ | 1,038
﻿2031 - 2037 |  |  | 2,485
﻿No expiration |  |  | 0
﻿Total deferred tax assets |  | $ | 3,523
﻿ 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, 2017, the Company’s undistributed foreign earnings have become subject to a one-time transition tax resulting from the Tax Act. The Company continues to consider its foreign earnings indefinitely reinvested. 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 foreign earnings could become subject to additional taxes if they are repatriated to the United States. ﻿ As of December 31, 2017, the Company’s unrecognized tax benefit totaled $0.8 million. A portion of this adjustment has been recorded as a component of taxes payable, and a portion of this adjustment has been recorded as a reduction to deferred tax assets in the accompanying consolidated balance sheet as of December 31, 2017. 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 |  | 2017 |  | 2016
﻿Unrecognized tax benefit - January 1 |  | $ | 754 |  | $ | 684
﻿Gross increases - tax positions in prior period |  |  | 49 |  |  | 70
﻿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 |  |  | 0
﻿Unrecognized tax benefit - December 31 |  | $ | 803 |  | $ | 754
﻿ 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 2017 and 2016. The $0.8 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 |  | 2017 |  | 2016 |  | 2015
﻿Income (loss) before taxes: |  |  |  |  |  |  |  |  |
﻿ U.S. |  | $ | 1,059 |  | $ | 138 |  | $ | (1,593)
﻿Foreign |  |  | 11,392 |  |  | 15,462 |  |  | 16,238
﻿Total income before taxes |  | $ | 12,451 |  | $ | 15,600 |  | $ | 14,645
﻿ ﻿

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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 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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