|12 Months Ended|
Dec. 31, 2020
Note 10 — Income Taxes
The Company files U.S. federal and various state and foreign tax returns.
Pre-tax earnings consisted of the following for the years ended:
The provision expense/(benefit) for income taxes for the years ended December 31, 2020, 2019 and 2018 was as follows:
A reconciliation of the statutory U.S. federal income tax rate to the effective rates for the years ended December 31, 2020, 2019 and 2018 is as follows:
Significant components of the Company’s deferred tax assets and liabilities at year end are as follows:
In response to the COVID-19 pandemic, many governments have enacted or are contemplating measures to provide aid and economic stimulus. These measures may include deferring the due dates of tax payments or other changes to their income and non-income-based tax laws. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020 in the U.S., includes measures to assist companies, including temporary changes to income and non-income-based tax laws. The Company has assessed the provisions of the CARES Act and determined that there were no material tax impacts to the consolidated financial statements for the year ended December 31, 2020.
As of December 31, 2020, the Company has approximately $135 million in US federal net operating loss (NOL) carry-forwards and $1.5 million of Japanese NOL carryforwards. The federal NOL carryforwards generated in tax years prior to 2018 will begin to expire in 2021. The federal NOL carryforwards generated in tax years after 2017 have no expiration. The Company has state NOL carryforwards of approximately $5.4 million available in various jurisdictions in which it files that will begin to expire in 2034. The Company also has approximately $3.8 million of federal and state credit carry-forwards. The federal and state credit carryforwards began to expire in 2021. Utilization of the NOL and credit carryforwards may be subject to an annual limitation in the case of sufficient equity ownership changes under Section 382 of the tax law or the carryforwards may expire unutilized.
As the result of the assessment of the FASB ASC 740-10 (Prior Authoritative Literature: FASB Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109), the Company has no unrecognized tax benefits.
The Company’s U.S. federal and state tax returns for the years 2017 through 2020 remain subject to examination by the respective tax authorities.
FASB ASC 740 (Prior Authoritative Literature: SFAS No. 109, Accounting for Income Taxes), requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on differing treatment of items for financial reporting and income tax reporting purposes. The deferred tax balances are adjusted to reflect tax rates by tax jurisdiction, based on currently enacted tax laws, which will be in effect in the years in which the temporary differences are expected to reverse. In light of the historic losses of the Company, a 100% valuation allowance has been recorded to fully offset any benefit associated with the net deferred tax assets, for which realization is not considered more likely than not to occur.
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/disclosureRef