|12 Months Ended|
Dec. 31, 2016
|Income Tax Disclosure [Abstract]|
Some amounts for the year ending December 31, 2015 have been revised, see Note 2 for further discussion of this revision.
The components of income before income taxes are as follows:
The components of the provision (benefit) for income taxes are as follows:
The Company’s deferred tax assets and liabilities result primarily from temporary differences between financial reporting and tax recognition of depreciation, reserves, and certain accrued liabilities.
Deferred tax assets and liabilities consist of the following:
The Company recorded a valuation allowance in the amount of $7,344 and $7,122 as of December 31, 2016 and 2015, respectively, related to the following items: 1) The Company recorded a valuation allowance on a deferred tax asset relating to interest rate swaps in the amount of $859 and $1,121 as of December 31, 2016 and 2015, respectively. The deferred tax asset represents a future capital loss which can only be recognized for income tax purposes to the extent of capital gain income. Although the Company anticipates sufficient future taxable income, it is more likely than not that it will not be of the appropriate character to allow for the recognition of the future capital loss. 2) As of December 31, 2016 and 2015, the Company recorded a valuation allowance on a deferred tax asset relating to a foreign net operating loss in the amount of $6,269 and $5,778, respectively. It is more likely than not that the Company will not generate sufficient taxable income at the foreign subsidiary level to utilize the net operating loss. 3) The Company recorded a valuation allowance on a deferred tax asset relating to a state net operating loss of $216 and $223 at one of its subsidiaries as of December 31, 2016 and 2015, respectively. It is more likely than not that the Company will not generate sufficient taxable income at the subsidiary level to utilize the net operating loss.
The provision for income taxes is based on the various rates set by federal and local authorities and is affected by permanent and temporary differences between financial accounting and tax reporting requirements.
The following is a reconciliation of the effective tax rates:
A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:
At December 31, 2016 and 2015, the Company had approximately $600 and $2,200, respectively, of total gross unrecognized tax benefits. The current year decrease in unrecognized tax benefits relates primarily to items resolved as part of the IRS audit and amounts related to years already audited. The Company believes that it is likely that none of the remaining unrecognized tax benefits related to federal and state exposures will be necessary within the next twelve months.
Of the total gross unrecognized tax benefits as of December 31, 2016 and 2015, $20 and $800, respectively, (both net of the federal benefit on state amounts) represent the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in any future periods.
At December 31, 2016 the Company had state net operating loss carryforwards of approximately $10,700, which will expire from 2016 through 2033. The tax effected portion of the state net operating loss relating to excess stock option deductions is approximately $12. Any tax benefit resulting from excess stock option deductions is recorded as an adjustment to additional paid in capital when realized. At December 31, 2016 the Company had Canadian net operating loss carryforwards of approximately $24,100, which will expire for tax years 2016 through 2026.
The Company does not accrue U.S. tax for foreign earnings that it considers to be permanently reinvested outside the United States. Consequently, the Company has not provided any U.S. tax on the unremitted earnings of its foreign subsidiaries. As of December 31, 2016, the amount of earnings for which no repatriation tax has been provided was estimated to be $0.
At December 31, 2016 the company had a federal tax credit carryforward of approximately $9,800 which will expire at various times through 2035. The portion of the federal tax credit relating to excess stock option deductions is approximately $4,000, the tax benefit of which will be recorded as an adjustment to additional paid in capital when realized.
The tax years 2014 through 2016 remain open to examination by major taxing jurisdictions. The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for federal and state income taxes. The (decrease) increase included in tax expense for the years end December 31, 2016, 2015 and 2014 were $(20), $(200) and $(200), respectively.
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