Note 11 - Income Taxes

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE

11

— INCOME TAXES

The Company’s effective tax rate expense (benefit) for the

three

months ended

March 31, 2019

and

2018

was

34.1%

and (

58.4

)%, respectively. The effective rate differs from the federal statutory rate of

21%

for the

three

months ended

March 31, 2019

due to: (i) the impact of the recently enacted global intangible low tax income (“GILTI”); (ii) the increase in the valuation allowance on the deferred tax assets related to the limitation on interest expense under the recently enacted IRC section

163

(j); (iii) withholding taxes on future dividend distributions; (iv) mix of business in various countries with higher and lower statutory rates than the federal rate; partially offset by (v) forecasted generation of production tax credits.

The Company is required by the Tax Act to include in U.S. taxable income amounts on related to GILTI. The Company elected as an accounting policy in

2018

to treat taxes due on future U.S, inclusions in taxable income under GILTI as a period cost when incurred. The Company has elected and applied the tax law ordering approach when considering GILTI as part of the Company’s valuation allowance.

As a result of the Tax Act, the Company is also subject to certain statutory restrictions on its interest deductions under IRC section

163

(j) which limits the interest deductions to business interest income plus

30%

of adjusted taxable income. Disallowed interest expense does

not

expire but can only be utilized in future years when an adjusted taxable income provides excess limitation. The Company is projecting an

$8.8

million interest expense carryforward attribute which has a full valuation allowance.