Income Taxes

9 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and tax basis of assets and liabilities using enacted tax rates in effect for years in which the temporary differences are expected to reverse. The Company provides a valuation allowance when it is more likely than not that deferred tax assets will not be realized.

The Company recorded a provision for income taxes of $0.1 million and $0.5 million for the three months ended September 30, 2018 and 2017, and $1.3 million and $0.8 million for the nine months ended September 30, 2018 and 2017, respectively. The provision for income taxes for the three months ended September 30, 2018 primarily consists of current tax expense, which relates primarily to the Company’s profitable operations in its foreign tax jurisdictions. The provision for income taxes for the nine months ended September 30, 2018 primarily consists of current tax expense, which relates primarily to the Company’s profitable operations in its foreign tax jurisdictions, and deferred tax expense, which relates to the establishment of a valuation allowance on the Company’s foreign deferred tax assets. The provisions for income taxes for the three and nine months ended September 30, 2017 consist of current tax expense, which relates primarily to the Company’s profitable operations in its foreign tax jurisdictions and U.S. alternative minimum tax.

The realization of deferred income tax assets is dependent on the generation of sufficient taxable income during future periods in which temporary differences are expected to reverse. Where the realization of such assets does not meet the more likely than not criterion, the Company applies a valuation allowance against the deferred income tax asset under consideration. The valuation allowance is reviewed periodically and if the assessment of the more-likely-than-not criterion changes, the valuation allowance is adjusted accordingly. As of September 30, 2018, the Company has a full valuation allowance applied against its Canadian, U.S., and foreign deferred tax assets.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted into law. The Act reduced the U.S. corporate tax rate from 35% to 21% effective January 1, 2018. As a result of the Company's U.S. valuation allowance on its U.S. deferred tax assets, the Act did not have an impact on the provision for income taxes for the three and nine months ended September 30, 2018.

In conjunction with the Act, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. The Company recognized the provisional impacts related to deemed repatriated earnings and the revaluation of deferred tax assets and liabilities and included these amounts in its audited consolidated financial statements for the year ended December 31, 2017. The Company completed its analysis of the deemed repatriated earnings and the revaluation of deferred tax assets and liabilities during the third quarter 2018. No measurement period adjustment to the Company’s provisional accounting was required.