The Company accounts for income taxes in accordance with ASC Topic 740. Under ASC Topic 740, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. In determining the need for a valuation allowance, management reviews both positive and negative evidence pursuant to the requirements of ASC Topic 740, including current and historical results of operations, future income projections and the overall prospects of the Company’s business.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent on the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on these items and the cumulative pretax losses (primarily resulting from asset impairment expenses), management has determined that enough uncertainty exists relative to the realization of the deferred income tax asset balances to warrant the application of a full valuation allowance for all taxing jurisdictions as of December 31, 2020. In addition, the Company has deferred tax liabilities related to indefinite lived intangibles on the balance sheet in an amount of approximately $4.9 million, which cannot be considered to be a source of taxable income to offset deferred tax assets.

At December 31, 2020, the Company has approximately $250.7 million in federal net operating loss carryforwards (NOLs), approximately $26.0 million of which will expire in FY 2036, and the remaining have unlimited lives. The Company also has foreign tax credit carryforwards of approximately $8.7 million, which will expire in 2023 and 2024 if unused. The Company also has $143.0 million of foreign net operating losses primarily in Luxembourg, where the losses incurred before 2016 have unlimited lives. The Company also has approximately $100.7 million apportioned state and local NOLs that will begin to expire in 2034 if not used.

Our use of our NOL carryforwards are limited under Section 382 of the Internal Revenue Code, as we have had a change in ownership of more than 50% of our capital stock over a three-year period as measured under Section 382 of the Internal Revenue Code. These complex changes of ownership rules generally focus on ownership changes involving shareholders owning directly or indirectly 5% or more of our stock, including certain public “groups” of shareholders as set forth under Section 382 of the Internal Revenue Code, including those arising from new stock issuances and other equity transactions.

As a result of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") signed into law on March 27, 2020, additional avenues of relief may be available to workers and families through enhanced unemployment insurance provisions and to small businesses through programs administered by the Small Business Administration ("SBA"). The CARES Act includes, among other things, provisions relating to payroll tax credits and deferrals, net operating loss carryback periods, alternative minimum tax credits and technical corrections to tax depreciation methods for qualified improvement property. As of December 31, 2020, the Company has recorded a $6.5 million benefit resulting from carrying back their 2018 Net Operating Loss to offset 2013 taxable income.

The Company’s consolidated effective tax rate was 42.6% and -6.0% for the year ended December 31, 2020 and December 31, 2019, respectively. The effective tax rate for the FY 2020 increased as compared to the FY 2019 primarily due to a $6.7 million tax benefit generated during 2020 related to the CARES Act which is calculated against a pre-tax loss as compared to 2019 where the company calculated a current tax expense due to foreign withholding taxes calculated against a pre-tax loss.

Management believes that an adequate provision has been made for any adjustments that may result from tax examinations; however, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company's tax audits are resolved in a manner not consistent with management's expectations, the Company could be required to adjust its provision for income tax in the period such resolution occurs.

The income tax provision (benefit) for federal, and state and local income taxes in the consolidated statement of operations consists of the following:

	Year Ended December 31, 2020			Year Ended December 31, 2019
Current:
Federal	$	(6,509	)	$	(1,012	)
State and local		21			(10	)
Foreign		3,552			6,785
Total current	$	(2,936	)	$	5,763
Deferred:
Federal		(185	)		23
State and local		402			(103	)
Foreign		514			—
Total deferred		731			(80	)
Total Provision	$	(2,205	)	$	5,683

As of December 31, 2020, the Company is not indefinitely reinvested in any foreign earnings.

The significant components of net deferred tax assets and liabilities of the Company consist of the following:

	2020			2019
State net operating loss carryforwards	$	6,117		$	4,064
U.S. Federal net operating loss carryforwards		54,349			36,391
Receivable reserves		1,344			280
Interest expense limitation		20,387			16,779
Intangibles		59,358			96,177
Equity compensation		1,988			1,838
Foreign Tax Credit		8,722			5,252
Other		5,895			9,293
Total deferred tax assets		158,160			170,074
Valuation allowance		(136,661	)		(143,453	)
Net deferred tax assets	$	21,499		$	26,621
Depreciation		—			(284	)
Convertible notes		(5,917	)		(6,451	)
Investment in joint ventures		(20,778	)		(24,350	)
Total deferred tax liabilities		(26,695	)		(31,085	)
Total net deferred tax liabilities	$	(5,196	)	$	(4,464	)
Balance Sheet detail on total net deferred tax assets (liabilities):
Non-current portion of net deferred tax assets		—			—
Non-current portion of net deferred tax liabilities	$	(5,196	)	$	(4,464	)

The following is a rate reconciliation between the amount of income tax provision (benefit) at the Federal rate of 21% and provision (benefit) from taxes on loss before income taxes for FY 2020 and FY 2019, respectively:

	2020			2019
Income tax benefit computed at the federal rate of 21%	$	(1,089	)	$	(19,791	)
Increase (reduction) in income taxes resulting from:
State and local income taxes (benefit), net of federal income tax		420			(115	)
Non-controlling interest		(1,146	)		(2,552	)
Valuation allowance		1,330			21,842
Interest on income tax receivable		—			(1,253	)
Non-deductible interest expense		1,143			1,192
Non-deductible executive compensation		332			150
Foreign Earnings (rate differential)		3,467			8,300
Prior Year True Up		(8	)		(2,400	)
US Tax Reform / CARES Act		(6,686	)		23
Other, net		32			287
Total	$	(2,205	)	$	5,683

With the exception of the Buffalo brand joint venture, Diamond Icon Joint Venture and Iconix Middle East joint venture, the Company is not responsible for the income taxes related to the non-controlling interest’s share of the joint venture’s earnings. Therefore, the tax liability associated with the non-controlling interest share of the joint venture’s earnings is not reported in the Company’s income tax expense, despite the joint venture’s entire income being consolidated in the Company’s reported income before income tax expense. As such, the joint venture’s earnings have the effect of lowering our effective tax rate. This effect is more pronounced in periods in which joint venture earnings are higher relative to our other earnings. Since the Buffalo brand joint venture is a taxable entity in Canada, and the Diamond Icon joint venture and Iconix Middle East joint venture are taxable entities in the United Kingdom, the Company is required to report its tax liability, including taxes attributable to the non-controlling interest, in its statement of operations. All other consolidated joint ventures are partnerships and treated as pass-through entities not subject to taxation in their local tax jurisdiction, and therefore the Company includes only the tax attributable to its proportionate share of income from the joint venture in income tax expense.

The Company files income tax returns in the U.S. federal and various state and local jurisdictions. For federal income tax purposes, during FY 2020, the Internal Revenue Service initiated an audit of the Company’s 2018 federal tax return. The audit is currently ongoing. The Company also files returns in numerous foreign jurisdictions that have varied years remaining open for examination, but generally the statute of limitations is three to four years from when the return is filed.

At December 31, 2020 and December 31, 2019, the total unrecognized tax benefit was approximately $0 million for both periods. Approximately $0 million of unrecognized tax benefits at December 31, 2020 would affect the Company's effective tax rate if recognized.

The Company is continuing its practice of recognizing interest and penalties to income tax matters in income tax expense. Total interest related to uncertain tax positions for FY 2020 and FY 2019 was $0 million for both periods.