XML 21 R12.htm IDEA: XBRL DOCUMENT v3.22.2
Income Taxes
 6 Months Ended
Jun. 30, 2022
Income Tax Disclosure [Abstract]  
Income Taxes

4. INCOME TAXES

 

Our effective tax rate changed from an expense of 18.1% of pre-tax income for the three months ended June 30, 2021, to an expense of 50.1% of pre-tax income for the three months ended June 30, 2022 and changed from an expense of 26.7% of pre-tax income for the six months ended June 30, 2021, to a benefit of 34.3% of pre-tax income for the six months ended June 30, 2022. The change in the effective tax rate for the three and six months ended June 30, 2022, was driven primarily by a change in our annual estimated tax rate as a result of the requirement to begin capitalizing research and development expenses for U.S. tax purposes beginning in 2022 as previously passed as part of the Tax Cuts and Jobs Act in December 2017 and the associated impact of those changes on our previously established valuation allowance.

 

The Company continually reviews the adequacy of its valuation allowance and recognizes the benefits of deferred tax assets only as the assessment indicates that it is more likely than not that the deferred tax assets will be recognized in accordance with ASC 740, Income Taxes. As of June 30, 2022, the Company had deferred tax assets totaling $71.4 million, and a valuation allowance totaling $62.9 million against those deferred tax assets. The remaining $8.5 million in deferred tax assets not offset by a valuation allowance are located in various foreign jurisdictions where the Company believes it is more likely than not we will realize these deferred tax assets. During the six months ended June 30, 2022, the total change in the valuation allowance against our domestic and international deferred tax assets was recorded in the amount of an $12.6 million increase and a $0.2 million decrease, respectively. Our assessment of the realizability of our deferred tax assets includes the evaluation of historical operating results as well as the evaluation of evidence which requires significant judgment, including the evaluation of our three-year cumulative income position, future taxable income projections and tax planning strategies. Should management’s conclusion change in the future and an additional valuation allowance or a partial or full release of the valuation allowance becomes necessary, it may have a material effect on our consolidated financial statements.

 

Supplemental balance sheet information related to deferred tax assets is as follows:

 

 

 

As of June 30, 2022

 

(In thousands)

 

Deferred Tax Assets

 

 

Valuation Allowance

 

 

Deferred Tax Assets, net

 

Domestic

 

$

60,873

 

 

$

(60,873

)

 

$

—

 

International

 

 

10,568

 

 

 

(2,060

)

 

 

8,508

 

Total

 

$

71,441

 

 

$

(62,933

)

 

$

8,508

 

 

 

 

As of December 31, 2021

 

(In thousands)

 

Deferred Tax Assets

 

 

Valuation Allowance

 

 

Deferred Tax Assets, net

 

Domestic

 

$

48,265

 

 

$

(48,265

)

 

$

—

 

International

 

 

11,378

 

 

 

(2,299

)

 

 

9,079

 

Total

 

$

59,643

 

 

$

(50,564

)

 

$

9,079