Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted and signed into law in response to coronavirus disease 2019 ("COVID-19"). The CARES Act, among other things, includes several significant provisions that could impact corporate taxpayers’ accounting for income taxes.  

Prior to the enactment of CARES Act, the 2017 Tax Cuts and Jobs Act generally eliminated the ability to carryback net operating losses ("NOL"), and permitted the NOL arising in tax years beginning after December 31, 2017 to be carried forward indefinitely, limited to 80% of the taxpayer’s income. The CARES Act amended the NOL rules suspending the 80% limitation on the utilization of NOLs generated after December 31, 2017 and before January 1, 2021. Additionally the CARES Act allows corporate NOLs arising in taxable years beginning after December 31, 2017 and before January 1, 2021, to be carried back to each of the five taxable years preceding the taxable year of the loss.

Accordingly, during the first quarter 2020, we performed various analyses and evaluated the potential impact to the company’s financial statements as a result of the CARES Act enactment. Based on our assessment, we determined that the modifications to the NOL carryback provision of the CARES Act would result in a tax benefit and cash flow to the company. The company expects that taxable losses incurred in 2019 and anticipate to incur in 2020 may fully be carried back and utilized against the taxable income generated in the previous tax years which were measured at 35%.

As a result of the CARES Act, after our detailed analysis and calculations, we recorded $3.2 million income tax benefit associated with the remeasurement of the 14% tax rate differential attributable to the NOL carryback to 35% tax years discretely in the first quarter of 2020. Furthermore, corresponding income tax receivable from the NOL carryback was recorded in the first quarter of 2020.