|12 Months Ended|
Dec. 31, 2016
|Income Tax Disclosure [Abstract]|
The components of loss before income taxes consist of the following (in thousands):
The provision for income tax expense (benefit) consists of the following (in thousands):
Total income tax benefit differs from the expected income tax benefit, computed by applying the federal statutory rate of 34% to earnings before income taxes as follows (in thousands):
The tax effects of temporary differences that give rise to significant portions of deferred tax assets (liabilities) are presented below (in thousands):
As of December 31, 2016, the Company had $78.1 million of net operating loss carryforwards for U.S. federal tax purposes and $63.9 million of net operating loss carryforwards for various states. The loss carryforwards for federal tax purposes will expire between 2022 and 2036 if not utilized. The loss carryforwards for state tax purposes will expire between 2022 and 2036 if not utilized.
As of December 31, 2016, the Company had federal and state research and development credit carryforwards of $3.0 million, net of Section 383 limitations, which will begin to expire in 2022 if not utilized.
As a result of its acquisition of Qumu, Inc. in October 2011, utilization of U.S. net operating losses and tax credits of Qumu, Inc. are subject to annual limitations under Internal Revenue Code Sections 382 and 383, respectively.
The Company assessed that the valuation allowance against its U.S. deferred tax assets is still appropriate as of December 31, 2016, based on the consideration of all available positive and negative evidence, using the “more likely than not” standard required by ASC 740, Income Taxes. The valuation allowance will be reviewed quarterly and will be maintained until sufficient positive evidence exists to support the reversal of the valuation allowance.
The Company generally believes that it is more likely than not that the future results of the operations of its subsidiaries in the U.K. will generate sufficient taxable income due to the reversal of deferred tax liabilities to realize the tax benefits related to its deferred tax assets. As of December 31, 2016, the Company had a cumulative foreign tax loss carryforward of $1.7 million in the U.K. This amount can be carried forward indefinitely.
As of December 31, 2016, the Company has accrued a $58,000 deferred tax liability on unremitted earnings attributable to its international subsidiaries that are no longer considered to be reinvested indefinitely. Accumulated undistributed foreign earnings relate primarily to operations of the Company's subsidiaries in Japan and the U.K. and amount to approximately $1.1 million as of December 31, 2016. The amount of cash and cash equivalents held by the Company's international subsidiaries that are not available to fund domestic operations unless repatriated was $1.4 million as of December 31, 2016. The repatriation of cash and cash equivalents held by the Company's international subsidiaries would not result in an adverse tax impact on cash due to the Company's net operating loss position with respect to income taxes.
A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits is presented in the table below (in thousands):
Included in the balance of unrecognized tax benefits at December 31, 2016 are potential benefits of $6,000 that if recognized, would affect the effective tax rate. The Company does not anticipate that the total amount of unrecognized tax benefits as of December 31, 2016 will change significantly by December 31, 2017.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. Total accrued interest and penalties amounted to $3,000 and $4,000 on a gross basis at December 31, 2016 and 2015, respectively, and are excluded from the reconciliation of unrecognized tax benefits presented above. Interest and penalties recognized in the consolidated statements of operations related to uncertain tax positions amounted to a net tax expense in 2016 of $1,000 and net tax benefit in 2015 of $3,000.
The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. As of December 31, 2016, the Company was no longer subject to income tax examinations for taxable years before 2014 in the case of U.S. federal taxing authorities, and taxable years generally before 2012 in the case of state taxing authorities, consisting primarily of Minnesota and California.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://www.xbrl.org/2003/role/presentationRef