|12 Months Ended|
Dec. 31, 2019
Note 11 — 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, 2019, 2018 and 2017 was as follows:
A reconciliation of the statutory U.S. federal income tax rate to the effective rates for the years ended December 31, 2019, 2018 and 2017 is as follows:
Significant components of the Company’s deferred tax assets and liabilities at year end are as follows:
As of December 31, 2019, the Company has approximately $118 million in US federal net operating loss (NOL) carry-forwards, $129,000 in United Kingdom NOL carry-forwards, and $1.35 million of Japanese NOL carry-forwards. The federal and state NOL carry-forwards generated in tax years prior to 2018 will begin to expire in 2020. As a result of the Tax Cuts and Jobs Act of 2017, the federal NOL carry-forwards created in 2018 and 2019 have no expiration. The Company has state NOLs of approximately $3.4 million available in several jurisdictions in which it files that will begin to expire in 2034. The Company also has approximately $3.5 million of federal and state credit carry-forwards. The federal and state credit carry-forwards began to expire during 2018. Utilization of the NOL carry-forwards may be subject to an annual limitation in the case of sufficient equity ownership changes under Section 382 of the tax law or the NOL's may expire unutilized.
As the result of the assessment of the FASB ASC 740-10, “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 matters for the years 2015 through 2018 remain subject to examination by the respective tax authorities.
FASB ASC 740 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://fasb.org/us-gaap/role/ref/legacyRef