|12 Months Ended|
Dec. 31, 2015
|Income Tax Disclosure [Abstract]|
Our loss before provision for income taxes was as follows (in thousands):
The tax provision for the years ended December 31, 2015, 2014 and 2013 consists primarily of taxes attributable to foreign operations and the tax effect of unrealized gains on our available for sale securities. The components of the provision for income taxes are as follows (in thousands):
Reconciliation of the provision for income taxes calculated at the statutory rate to our provision for (benefit from) income taxes is as follows (in thousands):
Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating losses and tax credit carryforwards.
Significant components of our deferred tax assets and liabilities are as follows (in thousands):
ASC Topic 740 requires that the tax benefit of NOL, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on our ability to generate sufficient taxable income within the carryforward period. Because of our history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not more likely than not to be realized and, therefore, has provided a valuation allowance against our deferred tax assets. Accordingly, the net deferred tax assets in all the Company’s jurisdictions have been fully reserved by a valuation allowance. The net valuation allowance increased by $1.2 million, $5.2 million and $14.6 million during the years ended December 31, 2015, 2014 and 2013, respectively. At such time as it is determined that it is more likely than not that the deferred tax assets are realizable, the valuation allowance will be reduced.
The following table sets forth the Company’s federal, state and foreign NOL carryforwards and federal research and development tax credits as of December 31, 2015 (in thousands):
Utilization of the net operating loss carryforwards and credits may be subject to an annual limitation due to the ownership change limitations defined by Section 382 of the Internal Revenue Code and similar state provisions. Accordingly, our ability to utilize NOLs and tax credit carryforwards may be limited as a result of such ownership changes. Such a limitation could result in the expiration of carryforwards before they are utilized. We have not completed a detailed Section 382 study at this time to determine what impact, if any, that ownership changes may have on our NOLs and tax credit carryforwards. In each period since its inception, we have recorded a valuation allowance for the full amount of our deferred tax assets. As a result, we have not recognized income tax benefit for our NOLs and tax credit carryforwards.
Income tax expense or benefit from continuing operations is generally determined without regard to other categories of earnings, such as discontinued operations and other comprehensive income. An exception is provided in ASC 740 when there is aggregate income from categories other than continuing operations and a loss from continuing operations in the current year. In this case, the tax benefit allocated to continuing operations is the amount by which the loss from continuing operations reduces the tax expenses recorded with respect to the other categories of earnings, even when a valuation allowance has been established against the deferred tax assets. In instances where a valuation allowance is established against current year losses, income from other sources, including gain from available-for-sale securities recorded as a component of other comprehensive income, is considered when determining whether sufficient future taxable income exists to realize the deferred tax assets. As a result, for the year ended December 31, 2015, we recorded a tax expense of $0.3 million in other comprehensive income related to the unrealized gain on available-for-sale securities, and recorded a corresponding tax benefit of $0.3 million in continuing operations.
In 2014, we determined that the undistributed earnings of our India subsidiary will be repatriated to the United States, and accordingly, we have provided a deferred tax liability totaling $0.2 million as of December 31, 2015. We have not provided for U.S. federal and state income taxes on all of the remaining non-U.S. subsidiaries’ undistributed earnings as of December 31, 2015 because such earnings are intended to be indefinitely reinvested. As of December 31, 2015, there were no cumulative un-remitted foreign earnings that are considered to be permanently invested outside the United States as the remaining foreign jurisdictions are in a cumulative loss position.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
We recognize interest and penalties as a component of our income tax expense. Total interest and penalties recognized in the consolidated statement of operations was $24,000, $(47,000) and $29,000, respectively, in 2015, 2014 and 2013. Total penalties and interest recognized in the balance sheet was $257,000 and $232,000, respectively, in 2015 and 2014. The total unrecognized tax benefits that, if recognized currently, would impact the Company’s effective tax rate were $0.4 million and $0.5 million as of December 31, 2015 and 2014, respectively. We do not expect any material changes to our uncertain tax positions within the next 12 months. We are not subject to examination by United States federal or state tax authorities for years prior to 2002 and foreign tax authorities for years prior to 2009.
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