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Income Taxes
6 Months Ended
Jun. 30, 2020
Income Taxes  
Income Taxes

15. Income Taxes

The income tax provision for the interim periods covered by this Quarterly Report on Form 10-Q reflects the Company’s estimate of the effective tax rates expected to be applicable for the full fiscal years, adjusted for any discrete events which are recorded in the period in which they occur. The estimates are reevaluated each quarter based on the Company’s estimated tax expense for the full fiscal year.

The following table presents information regarding Company’s income tax expense recognized for the three and six months ended June 30, 2020 and 2019:

Three months ended June 30, 

Six months ended June 30, 

2020

 

2019

2020

2019

Provision for income taxes

$

246

$

$

246

$

Effective tax rate

3.0%

    

0.0%

2.8%

0.0%

The Company is subject to U.S. federal and state income taxes. For the three and six months ended June 30, 2020, the Company recorded income tax expense of $246, which reflects current state income taxes. Due to the utilization of net operating losses (or “NOLs”) carried forward, no current federal income tax expense was recorded. For the three and six months ended June 30, 2019, the Company did not record income tax expense due to the utilization of federal and state NOLs carried forward. The utilization of the Company’s NOLs has not resulted in any deferred federal tax expense because there was a full valuation allowance recorded with respect to the NOLs.

Deferred tax assets and deferred tax liabilities are recognized based on temporary differences between the financial reporting and tax bases of assets and liabilities using statutory rates. The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, which are comprised principally of federal and state NOLs along with other tax credits. Under the applicable accounting standards, the Company considered its history of losses and concluded that it is more likely than not that the Company will not recognize the benefits of federal and state deferred tax assets. Accordingly, as of June 30, 2020, a full valuation allowance has been established against the Company’s otherwise recognizable net deferred tax assets.

In March 2020, the Coronavirus Aid, Relief and Economic Security Act (“the CARES Act”) was signed into law. The CARES Act includes provisions relating to several aspects of corporate income taxes. The Company does not currently expect the CARES Act to have a significant impact on its provision for income taxes; however, it will continue to monitor the provisions of the CARES Act in relation to its operations.