Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.19.3.a.u2
Income Taxes
12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes

7. INCOME TAXES

The following table reconciles the United States statutory income tax rate with our effective income tax rate:

 

 

Year ended December 31,

 

 

 

2019

 

 

2018

 

 

2017

 

United States statutory rate

 

 

21.0

%

 

 

21.0

%

 

 

34.0

%

State Tax, net of Federal Benefit

 

 

1.0

%

 

 

0.7

%

 

 

%

Stock-based compensation

 

 

(1.6

%)

 

 

3.6

%

 

 

0.6

%

Officers compensation

 

 

(1.3

%)

 

 

%

 

 

%

Deferred rate change

 

 

%

 

 

0.3

%

 

 

(12.9

%)

R&D credit

 

 

1.8

%

 

 

0.7

%

 

 

%

Other

 

 

0.3

%

 

 

0.7

%

 

 

%

Change in valuation allowance

 

 

(21.2

%)

 

 

(27.0

%)

 

 

(21.7

%)

Effective income tax rate

 

 

%

 

 

%

 

 

%

 

Deferred assets and liabilities consist of the following:

 

 

 

December 31,

 

In Thousands

 

2019

 

 

2018

 

 

2017

 

Net operating losses

 

$

24,852

 

 

$

16,372

 

 

$

9,252

 

Stock-based compensation expenses

 

 

3,637

 

 

 

2,747

 

 

 

2,691

 

Financing lease obligations

 

 

4,640

 

 

 

4,009

 

 

 

2,131

 

Tax credit carry forwards

 

 

2,106

 

 

 

922

 

 

 

735

 

Compensation and employee benefits

 

 

97

 

 

 

474

 

 

 

576

 

Other

 

 

307

 

 

 

116

 

 

 

8

 

Gross deferred tax assets

 

 

35,639

 

 

 

24,640

 

 

 

15,393

 

Less valuation allowance

 

 

(30,888

)

 

 

(20,329

)

 

 

(12,792

)

Net deferred tax assets

 

 

4,751

 

 

 

4,311

 

 

 

2,601

 

Fixed assets

 

 

(4,746

)

 

 

(4,352

)

 

 

(2,600

)

Other

 

 

(5

)

 

 

41

 

 

 

(1

)

Gross deferred tax liabilities

 

 

(4,751

)

 

 

(4,311

)

 

 

(2,601

)

Net deferred tax asset or liability

 

$

 

 

$

 

 

$

 

We provide for a valuation allowance when it is more likely than not that we will not realize a portion of the deferred tax assets. We have established a valuation allowance against our deferred tax assets described above as current evidence does not suggest we will realize enough taxable income of the appropriate character within the carryforward period to allow us to realize these deferred tax benefits.

We have $141.2 million of tax loss carryforwards. Of this amount, $35.2 million is state operating loss carryforwards and $105.9 million is federal operating loss carryforwards. The federal carryforward periods are as follows: $64.0 million do not expire; zero expire in 2019 and 2020; and $41.9 million expire in 2032 and beyond. The state carryforward period is 20 years.

On December 22, 2017, the TCJA was signed into law. The TCJA results in significant revisions to the United States corporate income tax system, including a reduction in the United States corporate income tax rate, implementation of a territorial system, and a one-time deemed repatriation tax on untaxed foreign earnings. The TCJA also results in a United States federal blended statutory rate of 21 percent for us in 2018. We completed the accounting for the income tax effects of the TCJA as of December 31, 2018. 

We are subject to federal income taxes in the United States as well as various state and local jurisdictions. Several years may elapse before an uncertain tax position is audited and finally resolved. While it is often difficult to predict the outcome or the timing of resolution of any uncertain tax position, we do not believe that we need to recognize any liabilities for uncertain tax positions as of December 31, 2019.

The number of years with open tax audits varies depending on the tax jurisdiction. Our major taxing jurisdictions are the United States, both federal and state. Various tax examinations by United States state taxing authorities could be conducted for any open tax year, which vary by jurisdiction, but are generally from 3 to 5 years.