|12 Months Ended|
Dec. 31, 2016
|Income Tax Disclosure [Abstract]|
The following table summarizes (loss) income before income taxes for the years ended December 31 (in thousands):
The following table summarizes the components of the consolidated provision for income taxes for the years ended December 31 (in thousands):
The following table summarizes a reconciliation of the effective income tax rate to the U.S. federal statutory rate for the years ended December 31:
The following table summarizes the temporary differences and carryforwards that give rise to deferred tax assets and liabilities as of December 31 (in thousands):
The classification of net deferred income taxes as of December 31, 2016 is summarized (in thousands):
The classification of net deferred tax assets as of December 31, 2015 is summarized (in thousands):
As of December 31, 2016 the Company recognized a benefit of $0.6 million for research and development credits pertaining to the Company’s development of software that enables third parties to interact, initiate functions or review data on the Company’s system.
As of December 31, 2016 and 2015, the Company had federal net operating loss carryforwards remaining of approximately $24.1 million and $15.5 million, respectively.
The Company’s deferred tax asset related to net operating losses (“NOLs”) is less than the actual NOLs available for tax return filings. The U.S. Federal NOL carryforwards include $0.6 million relating to deductions taken with respect to stock option exercises in excess of amounts recognized for financial reporting purposes for which a benefit would be recorded in APIC when realized. This portion of the NOL carryforwards is not included as a component of the Company’s deferred tax asset. Therefore, the Company did not recognize the benefit of tax deductions allowed for stock option exercises in excess of compensation expense recognized for financial reporting purposes, because the Company has NOL carryforwards available and it did not reduce income tax payable.
The Company’s federal net operating loss carryforwards of approximately $24.1 million will begin to expire in various years beginning in 2028. The state net operating losses of approximately $0.8 million can be used for a period of 5 to 20 years and vary by state, and if unused, begin to expire in 2017, though a substantial portion expires beyond 2017. Tax benefits of operating loss and tax credit carryforwards are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and other circumstances. The Company expects to be able to utilize these net operating loss carryforwards and therefore has not recorded a valuation allowance which is described in more detail below.
The Company’s realization of its deferred tax assets is dependent upon many factors, including, but not limited to, the Company’s ability to generate sufficient taxable income. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. Based on historical performance, sufficient earnings history exists to support the realization of the deferred tax assets. In addition, the Company has significant future reversals of taxable temporary differences such as depreciation and amortization that will provide a source of taxable income. The evidenced ability to generate sufficient taxable income such as cumulative earnings in recent years and significant future reversals of taxable temporary differences is the basis for the Company’s assessment that the deferred tax assets are more likely than not to be realized.
The Company had no uncertain tax positions for the years ended December 31, 2016 and 2015.
The Company is subject to taxation for Federal and various state jurisdictions in the United States and Canada. The Federal income tax returns of the Company for the years 2013 through 2016 are subject to examination by the Internal Revenue Service. The state income tax returns and other state tax filings of the Company are subject to examination by the state taxing authorities, for various periods generally up to four years after they are filed. Canadian income tax returns of the Company for the years 2012 through 2016 are subject to examination by the Canada Revenue Agency.
The Company completed an update to its analysis of past ownership (as defined under Section 382 of the Code), and as a result, the Company believes that, consistent with previously completed analyses, it has not experienced an ownership change since December 31, 2010. The Company has undertaken a definitive analysis necessary to quantify the effect of ownership change as of December 31, 2010 on the net operating loss carryforwards generated prior to December 31, 2010. Based on the analysis, the Company is subject to an annual limitation of $1.8 million on its use of remaining pre-ownership change net operating loss carryforwards of $4.7 million (and certain other pre-change tax attributes).
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://www.xbrl.org/2003/role/presentationRef