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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2015
Income Tax Disclosure [Abstract] |
Income Taxes | 14. INCOME TAXES The components of the income tax provision (benefit) were as follows (in thousands):
|  | Year Ended December 31, |
|  | 2015 |  | 2014 |
Current |  |  |  |  |  |  |
Federal |  | $ | - |  | $ | - |
State |  |  | 6 |  |  | 19 |
Foreign |  |  | - |  |  | 43 |
Deferred |  |  | (2,708) |  |  | 461 |
Total income tax provision (benefit) |  | $ | (2,702) |  | $ | 523 |
The components of income (loss) before taxes are summarized below (in thousands):
|  | Year Ended December 31, |
|  | 2015 |  | 2014 |
Income (loss) before taxes |  |  |  |  |  |  |
U.S. operations |  | $ | (7,563) |  |  | (3,130) |
Foreign operations |  |  | (1,020) |  |  | 3,385 |
Income (loss) before taxes |  | $ | (8,583) |  |  | 255 |
A reconciliation from the statutory U.S. income tax rate and the Company's effective income tax rate, as computed on income (loss) before taxes, is as follows:
|  | Year Ended December 31, |
|  | 2015 |  | 2014 |
Federal income tax at statutory rate |  |  | 35 | % |  | 35 | %
State and local income tax, net |  |  | 4 |  |  | 3 |
Foreign rate differential |  |  | (8) |  |  | (8) |
Other permanent items |  |  | - |  |  | (39) |
International withholding tax |  |  | - |  |  | 17 |
Impairment of goodwill and intangibles |  |  | - |  |  | 197 |
Recognition of prior years' NOL's |  |  | - |  |  | - |
Effective income tax expense rate |  |  | 31 | % |  | 205 | %
The Company’s provision for income taxes reflects an effective tax rate on income (loss) before income taxes of 31% in 2015, as compared to 205% in 2014. The increase in the Company’s effective tax rate during 2014 primarily reflects non-deductible impairment charges of $1.4 million related to a write-down of goodwill and intangibles. Provision has not been made for U.S. or additional foreign taxes on undistributed income of Canadian foreign subsidiaries, which have been, and will continue to be reinvested with the exception of certain immaterial deemed dividends. This income could become subject to additional tax if they were remitted as dividends, if foreign income were loaned to us or a U.S. affiliate, or if we should sell, transfer or dispose of our stock in the foreign subsidiaries. It is not practicable to determine the amount of additional tax, if any, that might be payable on the foreign income because if we were to repatriate this income, we believe there would be various methods available to us, each with different U.S. tax consequences. As of December 31, 2015, the cumulative amount of undistributed income was approximately $15.1 million. The net deferred income tax asset (liability) was comprised of the following (in thousands ):
|  | December 31, |
|  | 2015 |  | 2014 |
Noncurrent deferred income taxes |  |  |  |  |  |  |
Total assets |  |  | 3,642 |  |  | 7,596 |
Total liabilities |  |  | (781) |  |  | (7,852) |
Net noncurrent deferred income tax asset (liability) |  |  | 2,861 |  |  | (256) |
Net deferred income tax asset (liability) |  | $ | 2,861 |  | $ | (256) |
The tax effect of temporary differences between GAAP accounting and federal income tax accounting creating deferred income tax assets and liabilities were as follows (in thousands):
|  | December 31, |
|  | 2015 |  | 2014 |
Deferred tax assets |  |  |  |  |  |  |
Canada net operating loss carry forward |  | $ | 37 |  | $ | 1,208 |
U.S. net operating loss carry forward |  |  | 1,361 |  |  | 1,075 |
Non-deductible reserves |  |  | 711 |  |  | - |
Pension plan |  |  | - |  |  | 116 |
Foreign tax credits |  |  | 1,111 |  |  | 1,036 |
Intangibles |  |  | 737 |  |  | 256 |
Other |  |  | 368 |  |  | 94 |
Valuation allowance |  |  | (431) |  |  | (1,042) |
Net deferred tax assets |  |  | 3,894 |  |  | 2,743 |
Deferred tax liabilities |  |  |  |  |  |  |
Fixed assets |  |  | (1,033) |  |  | (2,999) |
Deferred asset (liability), net |  | $ | 2,861 |  | $ | (256) |
The assessment of the amount of value assigned to our deferred tax assets under the applicable accounting rules is judgmental. We are required to consider all available positive and negative evidence in evaluating the likelihood that we will be able to realize the benefit of our deferred tax assets in the future. Such evidence includes scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and the results of recent operations. Since this evaluation requires consideration of events that may occur some years into the future, there is an element of judgment involved. Realization of our deferred tax assets is dependent on generating sufficient taxable income in future periods. We believe that it is more likely than not that future taxable income will be sufficient to allow us to recover substantially all of the value assigned to our deferred tax assets. However, if future events cause us to conclude that it is not more likely than not that we will be able to recover all of the value assigned to our deferred tax assets, we will be required to adjust our valuation allowance accordingly. As of December 31, 2015, we have federal net operating loss carryforwards of approximately $3.5 million, with a similar amount for state purposes. These net operating losses generally expire in 2035. We also have approximately $135 thousand of Canadian net operating losses which expire in 2033. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, exclusive of interest and penalties, is as follows (in thousands):
|  | Uncertain Tax |
|  | Position |
Balance as of December 31, 2013 |  | $ | 317 |
No activity |  |  |  |
Balance as of December 31, 2014 |  | $ | 317 |
No activity |  |  |  |
Balance as of December 31, 2015 |  | $ | 317 |
The Company’s policy is to recognize interest and penalties related to income tax matters as interest expense. Interest and penalties as they relate to the payroll tax issue are recorded as Other Expense. Management believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. Although timing of the resolution and/or closure of audits is highly uncertain, the Company does not believe it is reasonably possible that its unrecognized tax benefits would materially change in the next twelve months. The tax years subject to examination by major tax jurisdiction include the years 2012 and forward by the U.S. Internal Revenue Service and most state jurisdictions, and the years 2011 and forward for the Canadian jurisdiction.

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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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