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Income Taxes
3 Months Ended
Mar. 31, 2017
Income Tax Disclosure [Abstract]  
Income Taxes

5. Income Taxes

Deferred tax assets and liabilities are recognized based on temporary differences between the financial reporting and tax basis of assets and liabilities using future enacted tax rates. A valuation allowance is recorded against deferred tax assets if it is more likely than not that some or all of the deferred tax assets will not be realized.

 

For the three months ended March 31, 2017 and 2016, the Company did not recognize any tax expense or benefit due to its loss position. In the second quarter of 2017, when the sale of the Commercial Business closed, the Company will record a pre-tax gain on the sale of the Commercial Business. The Company expects to use a portion of its net operating losses to offset the taxable gain generated by the sale, which will result in a partial release of the Company’s valuation allowance in the second quarter of 2017. As of March 31, 2017, the sale of the Commercial Business had not been finalized, as all of the closing conditions had not been met and substantial uncertainty existed as to if the sale would be finalized. Therefore, as of March 31, 2017, after considering all available evidence, the Company concluded that it should maintain its valuation allowance.