Note 8 - Income Taxes

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Income Tax Disclosure [Text Block]

8.

INCOME TAXES

  

Income tax benefit increased

$3.4

million for the

three

months ended

March 31, 2020,

to a

$3.5

million income tax benefit as compared to an income tax benefit of

$0.1

million for the

three

months ended

March 31, 2019.

The Company’s effective tax rate benefit was

87%

and

4%

for the

three

months ended

March 31, 2020

and

2019,

respectively. The Company’s effective tax rate benefit increased in the

three

months ended

March 31, 2020,

as compared to the same period in

2019,

primarily due to a  favorable increase in excess tax benefits related to employee stock compensation and an income tax benefit recorded to carryback net operating losses (NOLs), pursuant to the provisions of Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) passed on

March 27, 2020,

which allows any federal net operating losses generated in years beginning after

December 31, 2017

and before

January 1, 2021

to be carried back up to

five

taxable years to offset taxable income in the prior periods. 

The Company’s total amount of unrecognized tax benefits, excluding interest and penalties, as of

March 31, 2020,

was

$13.0

 million, of which

$7.4

million, if recognized, would affect the Company’s effective tax rate. The Company’s total amount of unrecognized tax benefits, excluding interest and penalties, as of

December 31, 2019,

was

$13.6

million, of which

$7.9

million, if recognized, would affect the Company’s effective tax rate. As of

March 31, 2020,

the Company has recorded unrecognized tax benefits of 

$2.6

million, including interest and penalties of

$0.8

million, as long-term taxes payable in its Condensed Consolidated Balance Sheet. The remaining

$11.2

million has been recorded net of our deferred tax assets, of which

$5.6

 million is subject to a full valuation allowance. 

The valuation allowance was approximately

$10.0

million and

$10.5

million as of

March 31, 2020,

and

December 31, 2019,

respectively, which was related to California R&D tax credits and California net operating losses related to our acquisition of Syntricity that we currently do

not

believe are more likely than

not

to be ultimately realized.

The Company conducts business globally and, as a result, files numerous consolidated and separate income tax returns in the U.S. federal, various state and foreign jurisdictions. Because the Company used some of the tax attributes carried forward from previous years to tax years that are still open for audit, the federal and California statute of limitations remains open for all tax years since

1999

and

2002,

respectively. The Company is

not

currently subject to an income tax examination or under audit in any jurisdiction.