Note 8 - Income Taxes

6 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

8. Income Taxes

During the three months ended June 30, 2020 , the Company recorded an income tax benefit of $332 thousand. During the three months ended June 30, 2021, the Company recorded an income tax benefit of $4.57 million. The forecasted 2021 annual effective tax rate of 31.5% has been applied to net income before income taxes for the six months ended June 30, 2021. The effective tax rate for the six months ended June 30, 2021 was 39.65%, including amounts recorded for discrete events.

The difference in the 27% Canadian statutory tax rate and the annual forecasted effective tax rate is primarily a result of the jurisdictional mix of earnings and losses, valuation allowances, foreign exchange gains and losses, and permanently disallowed stock and executive compensation expenses. The Company maintains a valuation allowance against all deferred tax assets in Germany and the US, and certain deferred tax assets in Canada in the current and forecasted annual periods that we concluded are not more-likely-than-not to be realizable. The forecasted income tax benefit is primarily related to the ability to carry back losses in Canada to a prior year.

As of  December 31, 2020, there are $2.4 million of unrecognized tax benefits recorded as a liability on the Company’s financials. There was a $271 thousand increase in the liability during the six months ended June 30, 2021.