Income Taxes	3 Months Ended
Mar. 31, 2020
Income Taxes
Income Taxes	Note 10. Income Taxes The provision for income taxes is determined using an effective tax rate. For the three months ended March 31, 2020, the Company’s estimated effective tax rate of 0.83% was lower than the U.S. federal statutory rate primarily due to the generation of U.S. NOL carryforwards for which no benefit has been recognized due to the Company’s full valuation allowance, as well as state and foreign income taxes. The effective tax rate may be subject to fluctuations during the year as new information is obtained which may affect the assumptions used to estimate the effective tax rate, including factors such as expected utilization of NOL carryforwards, changes in or the interpretation of tax laws in jurisdictions where the Company conducts business, the Company’s expansion into new states or foreign countries, and the amount of valuation allowances against deferred tax assets. For the three months ended March 31, 2020, the Company recorded a benefit for income taxes of $(450,000), which was primarily comprised of U.S. federal, state, and foreign income taxes. For the three months ended March 31, 2019, the Company recorded a provision for income taxes of $122,000, which was primarily comprised of state and foreign income taxes. The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of its assets and liabilities, along with NOL and tax credit carryforwards. The Company records a valuation allowance against its deferred tax assets to reduce the net carrying value to an amount it believes is more likely than not to be realized. When the Company establishes or reduces the valuation allowance against its deferred tax assets, the provision for income taxes will increase or decrease, respectively, in the period such determination is made. For the three months ended March 31, 2020, the Company has established a valuation allowance for a significant portion of its deferred tax assets. Additionally, the Company follows an accounting standard addressing the accounting for uncertainty in income taxes that prescribes rules for recognition, measurement and classification in the financial statements of tax positions taken or expected to be taken in a tax return. As of March 31, 2020 and March 31, 2019, the Company had gross unrecognized tax benefits of $17.8 million and $13.6 million, respectively. On March 27, 2020, the United States enacted the Coronavirus Aid, Relief and Economic Security Act (CARES Act). The CARES Act is an emergency economic stimulus package that includes spending and tax relief measures to strengthen the United States economy and fund a nationwide effort to curtail the effects of COVID-19. Some of the more significant provisions which are expected to impact the Company’s condensed consolidated financial statements include increasing the NOL carryback period for certain losses to five years, which, prior to the CARES Act, the impacted NOLs were not eligible for carryback due to the Tax Cuts and Jobs Act, and accelerating the refund of alternative minimum tax credits. The Company has recorded a U.S. federal tax (benefit) of $(0.4) million for the quarter ended March 31, 2020 for the estimated impact of the CARES Act on its tax provision. While the Company does not expect future material impacts from the CARES Act, due to the recent enactment date, the Company will continue to analyze its impact in subsequent quarters.

Income Taxes

3 Months Ended

Mar. 31, 2020

Note 10. Income Taxes

The provision for income taxes is determined using an effective tax rate. For the three months ended March 31, 2020, the Company’s estimated effective tax rate of 0.83% was lower than the U.S. federal statutory rate primarily due to the generation of U.S. NOL carryforwards for which no benefit has been recognized due to the Company’s full valuation allowance, as well as state and foreign income taxes. The effective tax rate may be subject to fluctuations during the year as new information is obtained which may affect the assumptions used to estimate the effective tax rate, including factors such as expected utilization of NOL carryforwards, changes in or the interpretation of tax laws in jurisdictions where the Company conducts business, the Company’s expansion into new states or foreign countries, and the amount of valuation allowances against deferred tax assets. For the three months ended March 31, 2020, the Company recorded a benefit for income taxes of $(450,000), which was primarily comprised of U.S. federal, state, and foreign income taxes. For the three months ended March 31, 2019, the Company recorded a provision for income taxes of $122,000, which was primarily comprised of state and foreign income taxes.

The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of its assets and liabilities, along with NOL and tax credit carryforwards. The Company records a valuation allowance against its deferred tax assets to reduce the net carrying value to an amount it believes is more likely than not to be realized. When the Company establishes or reduces the valuation allowance against its deferred tax assets, the provision for income taxes will increase or decrease, respectively, in the period such determination is made. For the three months ended March 31, 2020, the Company has established a valuation allowance for a significant portion of its deferred tax assets.

Additionally, the Company follows an accounting standard addressing the accounting for uncertainty in income taxes that prescribes rules for recognition, measurement and classification in the financial statements of tax positions

taken or expected to be taken in a tax return. As of March 31, 2020 and March 31, 2019, the Company had gross unrecognized tax benefits of $17.8 million and $13.6 million, respectively.

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief and Economic Security Act (CARES Act). The CARES Act is an emergency economic stimulus package that includes spending and tax relief measures to strengthen the United States economy and fund a nationwide effort to curtail the effects of COVID-19. Some of the more significant provisions which are expected to impact the Company’s condensed consolidated financial statements include increasing the NOL carryback period for certain losses to five years, which, prior to the CARES Act, the impacted NOLs were not eligible for carryback due to the Tax Cuts and Jobs Act, and accelerating the refund of alternative minimum tax credits. The Company has recorded a U.S. federal tax (benefit) of $(0.4) million for the quarter ended March 31, 2020 for the estimated impact of the CARES Act on its tax provision. While the Company does not expect future material impacts from the CARES Act, due to the recent enactment date, the Company will continue to analyze its impact in subsequent quarters.