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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income before income taxes for U.S. and Non-U.S. operations are as follows:
  Twelve Months Ended December 31, 2021Twelve Months Ended December 31, 2020
(dollars in thousands)
U.S. (loss) income$(6,809)$(11,274)
Non-U.S. income(1,006)1,780 
(Loss) income before income taxes$(7,815)$(9,494)
The components of the income tax provision included in the consolidated statements of operations are all attributable to continuing operations and are detailed as follows:
Twelve Months Ended December 31, 2021Twelve Months Ended December 31, 2020
(dollars in thousands)
Current tax expense:
Federal$(333)$(2,918)
State51 42 
Foreign916 631 
Total634 (2,245)
Deferred tax expense:
Federal— (1,236)
State— (83)
Foreign(1,486)(220)
Total(1,486)(1,539)
Total income tax expense$(852)$(3,784)
Deferred income tax assets and liabilities at December 31, 2021 and December 31, 2020 reflect the effect of temporary differences between amounts of assets, liabilities and equity for financial reporting purposes and the bases of such assets, liabilities and equity as measured based on tax laws, as well as tax loss and tax credit carryforwards. The following table summarizes the components of temporary differences and carryforwards that give rise to deferred tax assets and liabilities:
  December 31, 2021December 31, 2020
(dollars in thousands)
Deferred tax assets (liabilities):    
Allowance for doubtful accounts$298 $345 
Inventories296 99 
Accrued payroll and benefits418 513 
Goodwill and intangible assets2,135 951 
Excess interest expense1,090 447 
Tax credits and NOLs3,226 1,427 
Lease liabilities2,412 2,604 
Other300 339 
Deferred tax asset before valuation allowance10,175 6,725 
Valuation allowance(3,354)(684)
Deferred tax asset6,821 6,041 
Property, plant, and equipment(1,975)(2,544)
Lease assets(2,348)(2,495)
Other(119)(109)
Deferred tax liability(4,442)(5,148)
Total deferred tax asset (liability)$2,379 $893 
Management evaluates all positive and negative evidence and uses judgment regarding past and future events, including operating results, to help determine when it is more likely than not that all or some portion of the deferred tax assets may not be realized. When appropriate, a valuation allowance is recorded against deferred tax assets to reserve for future tax benefits that may not be realized. As of the years ended December 31, 2021 and December 31, 2020, the Company has recorded a valuation allowance on the net U.S. federal and state deferred tax assets as the Company has concluded that it is not more than likely than not that these deferred tax assets will be realized.
As of December 31, 2021, we have cumulative tax effected U.S. federal tax losses of $1.8 million that carryforward indefinitely and U.S. state Net Operating Loss carry forwards of $0.2 million. Certain tax loss amounts begin to expire in the year 2024 while other state tax losses carryforward indefinitely. Also, we have $1.2 million of tax credit carryforwards, which expire in the years 2028 to 2042.
The transition tax provision of the 2017 tax reform act eliminated the basis difference that existed previously for purposes of ASC Topic 740. However, there are limited other taxes that could continue to apply such as foreign withholding and certain state taxes. U.S. income taxes have not been recognized for such taxes as the Company continues to remain indefinitely reinvested with respect to its foreign earnings. It is not practicable to estimate the amount of income taxes that may be payable on such undistributed foreign earnings.
A reconciliation of taxes on income from continuing operations based on the statutory federal income tax rate to the provision for income taxes is as follows:
Twelve Months Ended December 31, 2021Twelve Months Ended December 31, 2020
(dollars in thousands)
Income tax expense (benefit) at US Statutory Tax Rate $(1,641)$(1,994)
State income tax (benefit) expense, net of federal benefit(167)(31)
Foreign tax rate differential1 155 
U.S. Tax on non-U.S. income— (561)
Goodwill impairment156 — 
Research and Development credits(150)(269)
Assets Basis Adjustment(650)— 
NOL carryback— (1,037)
Valuation allowance2,670 63 
PPP loan forgiveness(1,396)— 
Other325 (110)
Total provision for income taxes$(852)$(3,784)
The Treasury Department issued final regulations in July 2020 that provide for a high-tax exception to the Global Intangible Low-Taxed Income (“GILTI”) tax that were retroactive to tax years beginning after December 31, 2017. As a result, the Company recognized a $0.6 million tax benefit in 2020 for the reduction of GILTI tax expense.
The Company recognizes the benefit of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon settlement with the relevant tax authority. The Company assesses all tax positions for which the statute of limitations remains open. The Company had no unrecognized tax benefits as of December 31, 2021 and December 31, 2020. The Company recognizes any penalties and interest when necessary as income tax expense. There were no penalties or interest recorded during the twelve months ended December 31, 2021 or December 31, 2020.
The Company files income tax returns in the United States, Mexico, and Canada as well as in various state and local jurisdictions. With few exceptions, the Company is no longer subject to income tax examinations by tax authorities for years before 2018 in the United States, before 2016 in Mexico, and before 2016 in Canada.