Income Taxes

9 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Centrus follows the asset and liability approach to account for deferred taxes. Deferred tax assets and liabilities are recognized for the anticipated future tax consequences of temporary differences between the balance sheet carrying amounts of assets and liabilities and their respective tax bases. A valuation allowance is provided if it is more likely than not that all, or some portion, of the deferred tax assets may not be realized.

Centrus returned to profitability for the nine months ended September 30, 2020 primarily due to increased margins in the LEU segment. Centrus has determined that the LEU segment’s continuing increased margins and strong backlog of orders support the assertion that it is more likely than not that all its state net deferred tax assets will be realized. Therefore, in the second quarter of 2020, the associated valuation allowance was released resulting in an income tax benefit of $0.8 million being recorded as a discrete item.

Centrus continues to maintain its assertion that it is more likely than not that its federal net deferred tax assets will not be realized because of a three-year cumulative pretax loss position as of September 30, 2020 and a significant federal net operating loss carryforward. As a result, Centrus continues to maintain a full valuation allowance on its federal net deferred tax assets.