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Income Taxes
3 Months Ended
Mar. 31, 2017
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
For the three months ended March 31, 2017, the Company recorded an income tax benefit inclusive of valuation allowance of $199 and $817 for the three months ended March 31, 2017 and 2016, respectively, reflecting an effective income tax rate of 6% for the three months ended March 31, 2017 and 11% for the three months ended March 31, 2016. The 2017 income tax benefit was due to the carryback of the 2017 financial loss on the 2016 tax return. For the three months ended March 31, 2017 and 2016, the Company calculated its income tax benefit using the estimated annual effective tax rate methodology.
As of both March 31, 2017 and December 31, 2016, the Company had a net deferred tax liability of $61. The Company maintained a full valuation allowance against its U.S. net deferred tax assets as of both March 31, 2017 and December 31, 2016.
As of March 31, 2017, the Company had $1,154 of unrecognized tax benefits and it is reasonably possible that the entire amount could be realized by the Company in the year ending December 31, 2017, since the income tax returns may no longer be subject to audit in 2017.
From time to time, the Company is under audit by federal, state, and local tax authorities and the Company may be liable for additional tax obligations and may incur additional costs in defending any claims that may arise. The Company was recently notified by the Internal Revenue Service that it intends to examine federal income tax returns for the years ended December 31, 2014 and 2015.
The following state and local jurisdictions are currently examining our respective returns for the years indicated: New York State (2006 through 2014), and New York City (2006 through 2012). In a revised letter dated December 12, 2016, the Company received from the State of New York a revised assessment related to tax years 2006-2009 for $4,722, inclusive of $2,044 of interest. The Company disagreed with the proposed assessment and has scheduled a conciliation conference with the State of New York to appeal the assessment. The Company has not recorded a tax reserve related to the proposed assessment. It is difficult to predict the final outcome or timing of resolution of any particular matter regarding these examinations. An estimate of the reasonably possible change to unrecognized tax benefits within the next 12 months cannot be made.