Income Taxes

3 Months Ended

Mar. 31, 2020

Income Taxes

Income Taxes

Note 9 — Income Taxes

Income taxes are estimated for each of the jurisdictions in which the Company operates. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as the tax effect of carryforwards. Realization of net deferred tax assets is dependent on future taxable income. At March 31, 2020, the Company’s U.S. deferred tax assets are fully offset by a valuation allowance since the Company cannot conclude that it is more likely than not that these future benefits will be realized.

At the end of each interim reporting period, the effective tax rate is aligned with expectations for the full year. This estimate is used to determine the income tax provision on a year-to-date basis and may change in subsequent interim periods. If necessary, the year-to-date tax benefit for interim period losses is limited to the amount that could be recognizable at the end of the fiscal year.

Loss before income taxes and income tax expense (benefit) for the three months ended March 31, 2020 and 2019 were as follows:

	Three months ended March 31,
	2020		2019
	(in thousands)
Loss before income taxes	$	(299)	$	(18,340)
Income tax expense (benefit)	$	268	$	190

The Company’s tax expense for the three months ended March 31, 2020 was $0.3 million, compared to $0.2 million for the comparable prior period. The 2020 tax expense included a $0.1 million expense related to the Company’s domestic operations and $0.2 million related to the Company’s non-U.S. operations, compared to 2019 when the expense included a $0.1 million expense related to the Company’s domestic operations and $0.1 million related to the Company’s non-U.S. operations. Although there was a domestic pre-tax loss for the three months ended March 31, 2020 and 2019, the Company did not provide a current tax benefit on domestic pre-tax losses, as the amounts are not realizable on a more-likely-than-not basis. The domestic tax expense for the current period is primarily attributable to the tax amortization of indefinite-lived intangible assets that is not available to offset U.S. deferred tax assets.