XML 28 R17.htm IDEA: XBRL DOCUMENT v3.20.2
Income taxes
6 Months Ended
Jun. 30, 2020
Income taxes [Abstract]  
Income taxes
10. Income taxes

We recorded an income tax benefit for the second quarter of 2020 of $921 thousand at an effective tax rate of 33.2%, compared to an income tax benefit for the second quarter of 2019 of $26 thousand at an effective tax rate of (16.3)%.  For the six months ended June 30, 2020, we recorded an income tax benefit of $1.4 million at an effective tax rate of 32.8%, compared to an income tax provision for the six months ended June 30, 2019 of $89 thousand at an effective tax rate of 8.7%The effective tax rate for the second quarter and first six months of 2020 was higher as it included the impact of the net operating loss (“NOL”) that we expect to carry back to prior years.  The CARES Act permits NOLs incurred in 2018, 2019 and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.  We expect to generate a NOL for 2020 which we will carry back to tax years that had a federal statutory tax rate of 34% compared to 21% in 2020.  The effective tax rate for the second quarter of 2019 was lower as it included the foreign-derived intangible income (“FDII”) deduction under the Tax Cuts and Jobs Act of 2017 as well as near breakeven pre-tax income in the second quarter of 2019.

We are subject to U.S. federal income tax, as well as income tax in certain U.S. state and foreign jurisdictions.  We have substantially concluded all U.S. federal, state and local income tax, and foreign tax regulatory examination matters through 2015.  However, our federal tax returns for the years 2016 through 2018 remain open to examination. Various state and foreign tax jurisdiction tax years remain open to examination as well, though we believe that any additional assessment would be immaterial to the Condensed Consolidated Financial Statements.

As of June 30, 2020, we had $107 thousand of total gross unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in any future periods.  We expect $27 thousand of the $107 thousand of unrecognized tax benefits will reverse in the third quarter of 2020 upon the expiration of the statute of limitations.

We recognize interest and penalties related to uncertain tax positions as income tax (benefit) provision.  As of June 30, 2020, we had $24 thousand of accrued interest and penalties related to uncertain tax positions.  The Company maintains a valuation allowance against certain deferred tax assets to reduce the future income tax benefits to expected realizable amounts.