|12 Months Ended|
Dec. 31, 2016
|Income Tax Disclosure [Abstract]|
The domestic and international components of income (loss) before provision (benefit) from income taxes are presented as follows:
The provision (benefit) for income taxes consists of the following:
The actual provision (benefit) for income taxes differs from the amount computed using the federal statutory rate as follows:
The components of the deferred income tax assets are as follows:
At December 31, 2016, the Company had federal, state and foreign tax net operating loss carryforwards of approximately $38.1 million, $39.3 million and $14.7 million, respectively. The federal and state tax loss carryforwards will begin to expire in 2020 and 2019, respectively, unless previously utilized. The foreign net operating loss carryforwards may be carried forward indefinitely provided certain requirements are met.
At December 31, 2016, the Company had federal and state tax credit carryforwards of approximately $33.6 million and $43.5 million, respectively. The federal tax credit carryforward will begin to expire in 2020, unless previously utilized. The state tax credits do not expire. In addition, the Company has federal alternative minimum tax credit carryforwards of $1.0 million that can be carried forward indefinitely.
The Company evaluated its net deferred income taxes, which included an assessment of the cumulative income or loss over the prior three-year period and future periods, to determine if a valuation allowance is required. After considering its recent history of losses, the Company recorded a valuation allowance on its net federal deferred tax assets. During 2016, the Company maintained a valuation allowance against all of its federal and state deferred tax assets as realization of such assets does not meet the more-likely-than-not threshold required under accounting guidelines. The Company also placed a valuation allowance on the foreign deferred tax assets of a newly formed entity. The Company will continue to assess the need for a valuation allowance on the deferred tax assets by evaluating positive and negative evidence that may exist. The valuation allowance during 2016 related to operations decreased by $6.7 million.
The Company adopted ASU No. 2016-09 in the second quarter of 2016, which is more fully described in Note 1. The new guidance requires, among other things, excess tax benefits and tax deficiencies to be recorded in the income statement in the provision for income taxes when awards vest or are settled. For the year ended December 31, 2016, the impact of adoption on the Company's results of operations was to reduce the provision for income taxes and increase net income by $8.3 million. Upon adoption, the Company had excess tax benefits for which a benefit could not be previously recognized of approximately $8.1 million; however, there was no cumulative effect on retained earnings in the consolidated balance sheet since the Company has a full valuation allowance against U.S. deferred tax assets.
At December 31, 2016, the Company’s unrecognized tax benefits totaled $23.4 million, $17.1 million of which, if recognized at a time when the valuation allowance no longer exists, would affect the effective tax rate. The Company will recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. At December 31, 2016, the Company had accrued approximately $0.2 million of interest and penalties. The Company expects decreases to its unrecognized tax benefits of $0.2 million within the next twelve months.
The following table summarizes the changes to the unrecognized tax benefits during 2016, 2015 and 2014:
The Company is subject to federal and state income tax in the United States and is also subject to income tax in certain other foreign tax jurisdictions. At December 31, 2016, the Company is no longer subject to federal, state or foreign income tax examinations for the years before 2013, 2012 and 2009, respectively. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses or tax credits were generated and carried forward, and make adjustments up to the amount of the net operating loss or credit carryforward amount.
At December 31, 2013, the Company was under examination by the federal tax authorities for the tax years 2010 and 2011. This examination closed in January 2014. The impact of any adjustments was reflected in 2013. The Company is not currently under federal, state or foreign examination.
On January 2, 2013, the American Taxpayer Relief Act of 2012 was enacted. The Act included several provisions related to corporate income tax including the reinstatement of the credit for qualified research and development. The credit was reinstated for years beginning after January 1, 2012. On December 19, 2014, the Tax Increase Prevention Act was enacted. The Act included several business tax provisions including the extension of the credit for qualified research and development through 2014. On December 18, 2015, the Protecting Americans from Tax Hikes Act of 2015 was enacted. The Act included several business tax provisions including the permanent extension of the credit for qualified research and development.
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