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Note 8 - Income Taxes
3 Months Ended
Mar. 31, 2020
Notes to Financial Statements  
Income Tax Disclosure [Text Block]
8.
Income Taxes:
 
For the
three
months ended
March 31, 2020
, we recorded an income tax expense of
$1.1
 million on income before income taxes of
$3.9
 million, using an estimated effective tax rate for the fiscal year ending
December 31, 2020 (
“Fiscal
2020”
) adjusted for certain minimum state taxes as well as the inclusion of a
$0.2
 
million tax recovery related to ASU
No.
2016
-
09—
Compensation—Stock Compensation
(Topic
718
): Improvements to Employee Share-Based Payment Accounting (“ASU
2016
-
09”
), which requires all excess tax benefits and tax deficiencies related to employee share-based payments to be recognized through income tax expense. Comparatively, for the
three
months ended
March 31, 2019
, the Company recorded an income tax expense of
$1.3
 million on income before taxes of
$4.1
 million, using an estimated effective tax rate for the
2019
 fiscal year and adjusted for the
$0.4
 million tax recovery impact related to ASU
2016
-
09.
 
 
In assessing the realizability of deferred tax assets, management considers 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 years in which those temporary differences become deductible. Management considers projected future taxable income, uncertainties related to the industry in which the Company operates, and tax planning strategies in making this assessment.
 
In connection with the eNom acquisition in
2017,
we acquired deferred tax liabilities primarily composed of prepaid registry fees. As a result, we aligned our tax methodology pertaining to the deductibility of prepaid registry fees for our other subsidiaries. In the
first
quarter of
2019,
we determined that we were in technical violation with respect to the administrative application of the accounting method change relating to the deductibility of prepaid registry fees for these additional subsidiaries.  In
February 2019,
the Company filed an application for relief (
"9100
Relief") to correct the issue. In
November 2019,
the Company was granted
9100
Relief and was given
30
days to file the appropriate forms based on prescribed instructions. The Company filed the forms in
December 2019
and now awaits the final IRS response and acceptance of the change in accounting method. Management is of the view that it is more likely than
not
that the IRS will accept the
9100
Relief and filing of the prescribed forms. As such,
no
additional tax uncertainties or related interest or penalties have been recorded as at
March 31, 2020
.
 
The Company recognizes accrued interest and penalties related to income taxes in income tax expense. The Company did
not
have significant interest and penalties accrued at
March 31, 2020
and
December 31,
2019
, respectively.