On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. The $2.2 trillion economic stimulus bill contains numerous tax law changes. We evaluated the tax changes to determine what provisions would apply to us. As permitted by the CARES Act we have deferred payment of the employer’s portion of social security payroll tax payments.

For the years ended December 31, 2020, 2019 and 2018, income (loss) before income taxes is broken out between U.S. and foreign-sourced operations and consisted of the following (in thousands):

The components of the provision for income taxes for the years ended December 31, 2020, 2019 and 2018, consisted of the following (in thousands):

The difference between the income tax expense (benefit) reported and amounts computed by applying the statutory federal rate of 21.0% to pretax income (loss) for the years ended December 31, 2020, 2019 and 2018, consisted of the following (in thousands):

(1)	Amounts for the years ended December 31, 2019 and 2018 in the table above have been updated for presentation and comparative purposes.

Deferred income tax assets and liabilities at December 31, 2020 and 2019, consisted of the following temporary differences and carry-forward items (in thousands):


	2020		2019
Deferred income tax assets:
Allowance for credit losses on trade receivables	$	1,198	$	693
Accrued compensation expense		9,694		9,244
Inventory differences		3,161		2,207
Net operating loss carryforwards		18,622		21,187
Deferred revenue		617		552
Stock-based compensation expense		7,360		4,672
Operating lease assets		15,182		16,838
Federal R&D tax credit		3,607		1,376
Other		13,993		6,189
Total deferred income tax assets		73,434		62,958

Deferred income tax liabilities:
Prepaid expenses		(1,078)		(1,128)
Property and equipment		(20,671)		(21,242)
Intangible assets		(47,178)		(53,933)
Foreign withholding tax		(5,358)		(5,240)
Operating lease liabilities		(13,855)		(15,847)
Other		(3,796)		(2,372)
Total deferred income tax liabilities		(91,936)		(99,762)
Valuation allowance		(10,213)		(4,644)
Net deferred income tax liabilities	$	(28,715)	$	(41,448)

Reported as:
Deferred income tax assets	$	4,597	$	3,788
Deferred income tax liabilities		(33,312)		(45,236)
Net deferred income tax liabilities	$	(28,715)	$	(41,448)

The deferred income tax balances are not netted as they represent deferred amounts applicable to different taxing jurisdictions. Deferred income tax balances reflect the temporary differences between the carrying amounts of assets and liabilities and their tax basis and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered. The valuation allowance is primarily related to state credit carryforwards, non-US net operating loss carryforwards, and capital loss carryforwards for which we believe it is more likely than not that the deferred tax assets will not be realized. The valuation allowance increased by approximately $5.6 million during the year ended December 31, 2020, decreased by approximately $345,000 during the year ended December 31, 2019, and increased by approximately $567,000 during the year ended December 31, 2018.

As of December 31, 2020, we had U.S federal net operating loss carryforwards of approximately $66.9 million, which were generated by Cianna Medical, Vascular Access Technologies, Inc., DFINE Inc., Biosphere Medical, Inc., and Brightwater prior to our acquisition of these companies. These net operating loss carryforwards are subject to annual limitations under Internal Revenue Code Section 382. If unused, $41.7 million of the NOLs will expire between 2025 and 2037. Approximately $25.2 million of the NOLs incurred after December 31, 2017 can be carried forward indefinitely. We anticipate that we will utilize all current net operating loss carryforwards prior to their expiration dates over the next 15 years. We utilized a total of approximately $23.7 million in U.S. federal net operating loss carryforwards during the year ended December 31, 2020.

As of December 31, 2020, we had approximately $27 million of non-U.S. net operating loss carryforwards, of which approximately $25.8 million have no expiration date and approximately $1.2 million expire at various dates through 2030. Non-U.S. net operating loss carryforwards utilized during the year ended December 31, 2020 were not material.

We do not consider our foreign earnings to be permanently reinvested. Consequently, we have recorded tax expense of approximately $228,000, $638,000 and $5.6 million for foreign withholding taxes on unremitted foreign earnings during the years ended December 31, 2020, 2019 and 2018, respectively.

We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes and recording the related assets and liabilities. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. In our opinion, we have made adequate provisions for income taxes for all years subject to audit. We are no longer subject to U.S. federal, state, and local income tax examinations by tax authorities for years before 2017. In foreign jurisdictions, we are no longer subject to income tax examinations for years before 2014.

Although we believe our estimates are reasonable, the final outcomes of these matters may be different from those which we have reflected in our historical income tax provisions and accruals. Such differences could have a material effect on our income tax provision and operating results in the period in which we make such determination.

The total liability for unrecognized tax benefits at December 31, 2020, including interest and penalties, was approximately $2 million, of which approximately $1.6 million would favorably impact our effective tax rate if recognized. Approximately $627,000 of the total liability at December 31, 2020 was presented as a reduction to non-current deferred income tax assets on our consolidated balance sheet. The total liability for unrecognized tax benefits at December 31, 2019, including interest and penalties, was approximately $2.5 million, of which approximately $2.2 million would favorably impact our effective tax rate if recognized. Approximately $230,000 of the total liability at December 31, 2019 was presented as a reduction to non-current deferred income tax assets on our consolidated balance sheet. As of December 31, 2020 and 2019, the total liability for uncertain tax benefits, as presented on our consolidated balance sheets, has been reduced by approximately $307,000 related to certain liabilities for unrecognized tax benefits, which, if realized, would reduce the transition tax under the TCJA by approximately $307,000. As of December 31, 2020 and 2019, we had accrued approximately $276,000 and $366,000 respectively, in total interest and penalties related to unrecognized tax benefits. We account for interest and penalties for unrecognized tax benefits as part of our income tax provision. During the years ended December 31, 2020, 2019 and 2018, our liability for unrecognized tax benefit was increased (decreased) for interest and penalties by approximately ($90,000), ($7,000) and $69,000, respectively. It is reasonably possible that within the next 12 months the total liability for unrecognized tax benefits may change, net of potential decreases due to the expiration of statutes of limitation, up to $250,000.

A reconciliation of the beginning and ending amount of liabilities associated with uncertain tax benefits for the years ended December 31, 2020, 2019 and 2018, consisted of the following (in thousands):


	2020		2019		2018
Unrecognized tax benefits, opening balance	$	2,161	$	2,947	$	2,749
Gross increases (decreases) in tax positions taken in a prior year		115		(244)		35
Gross increases in tax positions taken in the current year		283		229		586
Lapse of applicable statute of limitations		(885)		(771)		(423)
Unrecognized tax benefits, ending balance	$	1,674	$	2,161	$	2,947

The tabular roll-forward ending balance does not include interest and penalties related to unrecognized tax benefits.