Income Taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

14. INCOME TAXES

The Company recognizes income taxes under the asset and liability method. Deferred income taxes are recognized for differences between the financial reporting and tax bases of assets and liabilities at enacted statutory tax rates in effect for the years in which the differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. In determining future taxable income, the Company is responsible for assumptions that it utilizes, including the amount of Irish and non-Irish pre‑tax operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates that the Company uses to manage the underlying business.

The Company recorded an income tax provision of $2.7 million and an income tax benefit of $3.3 million during the three and six months ended June 30, 2023, respectively. The income tax provision in was related to U.S. federal and state taxes, due primarily to a $2.0 million discrete tax expense related to employee equity activity. The income tax benefit primarily related to enhanced foreign derived intangible income (“FDII”) deductions arising from the capitalization of research and development expenses in accordance with Section 174 of the U.S. Internal Revenue Code of 1986, as amended.

At December 31, 2022, the Company maintained a valuation allowance of $245.8 million against Irish deferred tax assets. During the three and six months ended June 30, 2023, the Company recorded a profit. Should the Company continue to demonstrate profitability in the future, the evaluation of the recoverability of such deferred tax assets may change and a portion of the valuation allowance could be released.