Income Taxes

The jurisdictional components of income (loss) before income taxes consist of the following (amounts in thousands):



	Year ended December 31,
	2019			2018
Domestic	$	(85,133	)	$	(53,230	)
Foreign	11,900			6,127
Income (loss) before income taxes	$	(73,233	)	$	(47,103	)

The components of our income tax expense (benefit) consist of the following (amounts in thousands):



	Year ended December 31,
	2019			2018
Current:
Federal	$	(206	)	$	(183	)
State	663			586
Foreign	654			967
	1,111			1,370
Deferred:
State	729			537
Foreign	(11,169		)	1
	(10,440		)	538

Income tax expense (benefit)	$	(9,329	)	$	1,908

The difference between the income tax benefit and the amount computed by applying the federal statutory income tax rate to loss before income taxes consists of the following (amounts in thousands):



	Year ended December 31,
	2019			2018
Expected tax expense (benefit)	$	(15,379	)	$	(9,892	)
Valuation allowance:
Valuation allowance	12,638			5,885
Reversal of valuation allowance on foreign operations	(14,756		)	—
Impact of tax law changes on valuation allowance	—			(1,692		)
State income taxes	614			972
Foreign currency translation loss	742			1,038
Net tax benefits and nondeductible expenses in foreign jurisdictions	940			3,104
GILTI tax	1,579			634
Incentive stock options	595			757
Compensation expense nondeductible for tax purposes	1,684			114
Restructuring costs	1,388			—
Other nondeductible expenses for tax purposes	575			715
Other, net	51			273
Income tax expense (benefit)	$	(9,329	)	$	1,908

Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements. The components of our deferred income tax assets and liabilities were as follows (amounts in thousands):



	Year ended December 31,
	2019			2018
Deferred tax assets:
Domestic net operating loss carryforward	$	102,827		$	96,777
Intangibles	12,145			14,875
Foreign net operating loss carryforward	8,007			9,582
Interest expense deduction limitation carryforward	6,649			2,495
Property and equipment	3,656			5,291
Employee stock-based compensation	3,124			3,271
Employee benefits and insurance claims accruals	2,422			5,374
Operating lease liabilities	1,832			—
Accounts receivable reserve	187			325
Inventory	202			236
Accrued expenses	233			190
Deferred revenue	124			560
	141,408			138,976
Valuation allowance	(59,842		)	(62,639		)

Deferred tax liabilities:
Property and equipment	(72,350		)	(79,606		)
Operating lease assets	(1,686		)	—
Accrued expenses	—			(419		)
Unbilled revenue	(407		)	—

Net deferred tax assets (liabilities)	$	7,123		$	(3,688	)

As of December 31, 2019, we had $102.8 million and $8.0 million of deferred tax assets related to domestic and foreign net operating losses, respectively, that are available to reduce future taxable income. In assessing the realizability of our deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

In performing this analysis as of December 31, 2019 in accordance with ASC Topic 740, Income Taxes, we assessed the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of deferred tax assets. During the fourth quarter of 2019, as a result of sustained profitability in our foreign operations, forecasted earnings, and other positive evidence, we determined that our foreign deferred tax assets, which include net operating loss carryforwards, were likely to be fully realized, and as a result, we reduced our valuation allowance and recorded a related income tax benefit of $14.8 million. As of December 31, 2019, we continue to maintain a valuation allowance against a portion of our domestic net deferred tax assets.

Our domestic federal net operating losses generated through 2017 have a 20-year carryforward period and can be used to offset future domestic taxable income until their expiration, beginning in 2030, with the latest expiration in 2037. Losses generated after 2017 have an unlimited carryforward period and are limited in usage to 80% of taxable income. The majority of our foreign net operating losses generated through 2016 have an indefinite carryforward period, while losses generated after 2016 have a carryforward period of 12 years. As of December 31, 2019, we have a valuation allowance that offsets a portion of our domestic deferred tax assets. We also have net operating loss carryforwards in many of the states that we operate in. Most of these are filed on a unitary or combined basis. These states have carryover periods between 5 and 20 years, with most being 15 or 20.

Our ability to utilize our domestic net operating loss carryforwards to offset future taxable income and to reduce our U.S. federal income tax liability is subject to certain requirements and restrictions. In connection with the Chapter 11 Cases, we may experience an ownership change, as defined in the U.S. Internal Revenue Code, which would result in some of our net operating losses being subject to annual limitations. For additional information concerning our bankruptcy proceedings under Chapter 11, see Note 2, Going Concern and Subsequent Events, and Item 1A – “Risk Factors” in Part I of this Annual Report on Form 10-K.

We have no unrecognized tax benefits relating to ASC Topic 740 and no unrecognized tax benefit activity during the year ended December 31, 2019. We record interest and penalty expense related to income taxes as interest and other expense, respectively. At December 31, 2019, no interest or penalties have been or are required to be accrued. Our open tax years are 2016 and forward for our federal and most state income tax returns in the United States and 2014 and forward for our income tax returns in Colombia. Net operating losses generated in years prior to our open years and carried forward are available for adjustment and subject to the statute of limitation provisions of such year when the net operating losses are utilized.

International Tax Reform

On December 28, 2018, the Colombian government enacted a new tax reform bill that decreases the general corporate tax rate from 33% to 30% by 2022, phases out the presumptive tax system by 2021, increases withholding tax rates on payments abroad for various services, and taxes indirect transfers of Colombian assets, among other things. Deferred tax assets and liabilities were adjusted to the new tax rates as of December 31, 2018; however, the adjustments to the valuation allowance fully offset the impact to tax expense in the year of enactment.

On October 19, 2019, the Colombian Constitutional Court declared Colombia’s 2018 Tax Reform unconstitutional due to procedural flaws in the approval process. On December 27, 2019, Colombia re-enacted the tax reform effective January 1, 2020, mirroring most of the provisions contained in the 2018 Tax Reform that was ruled unconstitutional.