Income Taxes

9 Months Ended

Sep. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

For the three and nine months ended September 30, 2016, the Company recorded income tax expense (benefit) of $141,000 and $(276,000), or (542.3%) and 32.4% of loss before taxes, respectively. For the three and nine months ended September 30, 2015, the Company recorded income tax expense of $382,000 and $621,000, or 40.5% and 40.6% of income before taxes, respectively. The income tax provision (benefit) for the three and nine months ended September 30, 2016 and 2015 is composed of federal and state taxes. The primary differences between the Company’s September 30, 2016 and 2015 effective tax rates and the statutory federal rate are expenses related to stock-based compensation and nondeductible meals and entertainment. At relatively low levels of projected income (loss) before income taxes, these differences can result in large swings in the effective rate which resulted in an income tax expense for the three months ended September 30, 2016 despite a pretax loss. The Company reassesses its effective rate each reporting period and adjusts the annual effective rate if deemed necessary, based on projected annual taxable income (loss).

As of September 30, 2016 and December 31, 2015, the Company had unrecognized tax benefits totaling $528,000, including interest, which relate to state nexus issues. The amount of the unrecognized tax benefits, if recognized, that would affect the effective income tax rates of future periods is $528,000. Due to the current statute of limitations regarding the unrecognized tax benefits, the unrecognized tax benefits and associated interest is not expected to change significantly in 2016.