Note 12. Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

The provision for income taxes consisted of the following components for the years ended December 31 (in 000’s):

	2020			2019
Current:
Federal	$	307		$	522
State		84			94
Foreign		21			21
Total Current		412			637
Deferred:
Federal		283			(434	)
State		50			(55	)
Foreign		(21	)		(39	)
Total Deferred		312			(528	)
Total expense for income taxes	$	724		$	109

Reconciliation between the statutory rate and the effective tax rate is as follows on December 31 (in 000's, except percentages):

	2020						2019
	Amount			Percentage			Amount			Percentage
Federal statutory tax rate	$	594			21.0	%	$	165			21.0	%
State tax rate		117			4.1	%		12			1.5	%
Permanent difference – stock-based compensation		29			1.1	%		(13	)		(1.6	)%
Permanent difference – other		12			0.3	%		8			0.9	%
Provision to return		4			0.2	%		(37	)		(4.5	)%
Foreign tax credit generated		(15	)		(0.5	)%		—			0.0	%
Tax on foreign earnings – tax reform		17			0.6	%		24			2.9	%
Foreign rate differential		(2	)		(0.1	)%		(11	)		(1.3	)%
FDII Deduction		(32	)		(1.1	)%		—			0.0	%
Research and development credit		—			0.0	%		(39	)		(4.7	)%
Total	$	724			25.6	%	$	109			14.2	%

Components of net deferred income tax assets are as follows on December 31 (in 000's):

	2020			2019			Change
Assets:
Deferred revenue	$	24		$	379		$	(355	)
Allowance for doubtful accounts		149			149			—
Stock options		108			156			(48	)
Transaction costs		46			49			(3	)
Other		138			39			99
Total deferred tax asset		465			772			(307	)
Liabilities:
Prepaid expenses		(15	)		(23	)		8
Basis difference in fixed assets		(188	)		(14	)		(174	)
Capitalized software		—			(94	)		94
Purchase of intangibles		(459	)		(522	)		63
Other		—			(4	)		4
Total deferred tax liability		(662	)		(657	)		(5	)
Total net deferred tax asset / (liability)	$	(197	)	$	115		$	(312	)

As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred tax assets. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. It has been determined that is more likely than not that the Company's deferred tax assets are able to be realized based on future positive earnings and reversal of existing temporary differences.

The Company had no unrecognized tax benefits as of December 31, 2020 or December 31, 2019. Interest and, if applicable, penalties are recognized related to unrecognized tax benefits in income tax expense. There are no accruals for interest and penalties on December 31, 2020.

Undistributed earnings of the Company are insignificant as of December 31, 2020. With the enactment of the 2017 Act, the Company does not consider any of its foreign earnings as indefinitely reinvested.

The Company is subject to income taxation by both federal and state taxing authorities. Income tax returns for the years ended December 31, 2019, 2018 and 2017 are open to audit by federal and state taxing authorities.