Note 13 - Income Taxes
|9 Months Ended|
Sep. 30, 2020
|Notes to Financial Statements|
|Income Tax Disclosure [Text Block]||
Income taxes are accounted for under the asset and liability method in accordance with Accounting Standards Codification
Income Taxes. Deferred tax assets (“DTAs”) and deferred tax liabilities (“DTLs”) are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. DTAs and DTLs are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on DTAs and DTLs of a change in tax rates is recognized in income in the period that includes the enactment date.
Current accounting standards require a valuation allowance against DTAs if, based on the weight of available evidence, it is more likely than
notthat some or all of the DTAs
notbe realized. Due to the uncertainty surrounding the realization of these DTAs in future tax returns, all of the DTAs have been fully offset by a valuation allowance as of
September 30, 2020and
December 31, 2019,except the alternative minimum tax (“AMT”) credit carryforward amount described below.
In assessing the realizability of DTAs, management considers whether it is more likely than
notthat some portion or all of the DTAs will
notbe realized. The ultimate realization of DTAs is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods) and projected future taxable income in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the DTAs are deductible, management believes it is more likely than
notthat the Company will
notrealize the benefits of these deductible differences or tax carryforwards as of
September 30, 2020,except for the AMT credit carryforward.
The Tax Cuts and Jobs Act (the “Tax Act”) was signed into law on
December 22, 2017.The Tax Act repealed the AMT for corporations, and permits any existing AMT credit carryforwards to be used to reduce the regular tax obligation in
2020.Under the Tax Act, companies
maycontinue using AMT credits to offset any regular income tax liability in years
50%of remaining AMT credits refunded in each of the
2020tax years, and all remaining credits refunded in tax year
2021.This results in full realization of an existing AMT credit carryforward irrespective of future taxable income. Accordingly, the Company recorded AMT credit carryforwards of
December 31, 2019,
50%of which was included in prepaid expenses and other current assets, and
50%of which was included in other noncurrent assets as of
December 31, 2019.The CARES Act was signed into law on
March 27, 2020.Under the CARES Act, corporate AMT credits are now
100%refundable as early as the
2018tax year. Accordingly, the Company filed for and received the refund of all
$621,000of AMT credit carryforwards during the
Current accounting standards include guidance on the accounting for uncertainty in income taxes recognized in the financial statements. Such standards also prescribe a recognition threshold and measurement model for the financial statement recognition of a tax position taken, or expected to be taken, and provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company believes that the ultimate deductibility of all tax positions is highly certain, although there is uncertainty about the timing of such deductibility. As a result,
liability for uncertain tax positions was recorded as of
September 30, 2020or
2019and we do
notexpect any significant changes in the next
twelvemonths. Should we need to accrue interest or penalties on uncertain tax positions, we would recognize the interest as interest expense and the penalties as a selling, general and administrative expense. As of
September 30, 2020,tax years
2019remained subject to examination by federal and state tax authorities.
September 30, 2020,we had approximately
$142.2million of federal and
$20.1million of state net operating loss carryforwards, as well as approximately
$8.8million of federal research and development (“R&D”) credit carryforwards.
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