Post-effective amendment to a registration statement that is not immediately effective upon filing

INCOME TAXES

v3.22.0.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXESAs of December 31, 2021, unremitted earnings in foreign subsidiaries are indefinitely reinvested. Should these earnings be distributed in the future in the form of dividends or otherwise, the Company would be subject to withholding taxes payable
to various jurisdictions. Due to the 2017 Tax Act, there is no U.S. federal tax on cash repatriation from foreign subsidiaries, but it could be subject to foreign withholding tax and U.S. state income taxes.
Income before income taxes by tax jurisdiction consists of the following:
Years Ended December 31,
2021 2020 2019
United States $ 25,181  $ 8,738  $ 11,164 
Foreign (14,702) 2,398  6,425 
Total income $ 10,479  $ 11,136  $ 17,589 
Provision for current and deferred income taxes consists of the following:
            
Years Ended December 31,
2021 2020 2019
Current tax expense:
Federal $ 959  $ 945  $ 241 
State 731  297  720 
Foreign 396  791  665 
Total current tax expense $ 2,086  $ 2,033  $ 1,626 
Deferred tax expense:
Federal $ 1,443  $ (3,045) $ 1,997 
State (404) (748) 55 
Foreign (3,383) 89  297 
Total deferred tax expense $ (2,344) $ (3,704) $ 2,349 
Income tax expense (benefit) $ (258) $ (1,671) $ 3,975 
The difference between the actual rate and the federal statutory rate is as follows:
Years Ended December 31,
2021 2020 2019
Statutory rate 21.0  % 21.0  % 21.0  %
Foreign provision 0.6  (0.3) (6.5)
State/province income tax 4.0  0.1  5.6 
Stock compensation (1.6) (19.2) 7.5 
Unrecognized tax benefits 8.9  —  — 
Other effects of check-the-box election —  (6.2) 0.2 
Research credit (11.0) (11.5) (5.9)
Adjustment to carrying value 1.5  (4.0) (0.3)
Foreign tax credit (4.6) (9.1) (0.7)
Valuation allowance 3.2  9.0  — 
Foreign-derived intangible income deduction (FDII) —  (2.7) (1.1)
Non-deductible expenses-other 3.4  2.4  2.0 
Foreign branch income 1.3  4.5  1.0 
Fair value adjustment on warrants (27.9) —  — 
Other (1.3) 1.0  (0.2)
Effective tax rate (2.5) % (15.0) % 22.6  %
    
Deferred tax assets and liabilities consist of the following:
December 31,
2021 2020
Deferred tax assets:
Net operating loss carryforwards $ 10,384  $ — 
Tax credit carryforwards 4,929  6,882 
Accrued liabilities 785  5,576 
Stock compensation 2,221  1,457 
Charitable contribution 697  — 
Deferred rent 41  74 
Other 89  276 
Total gross deferred tax assets $ 19,146  $ 14,265 
Less: Valuation allowance (1,334) (1,002)
Total deferred tax assets $ 17,812  $ 13,263 
Deferred tax liabilities:
Intangibles 176  185 
Property and equipment 10,189  12,457 
Prepaid taxes 1,165  482 
Total deferred tax liabilities $ 11,530  $ 13,124 
Deferred tax assets (liability), net $ 6,282  $ 139 


Foreign tax credits can be carried forward to offset future U.S. taxable income subject to certain limitations for a period of 10 years. Foreign tax credits of $1.3 million will begin to expire in 2030. As of December 31, 2021, the Company had a full valuation allowance of $1.3 million on the foreign tax credit carryforward due to the uncertainty of future foreign source taxable income, primarily due to projected tax deductions associated with future exercises of non-qualified stock options. In making such determination, the Company considered all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, projected future foreign source income, tax planning strategies and recent financial operations. These assumptions required significant judgment about the forecasts of future taxable and foreign source income.
The following is a tabular reconciliation of the total amounts of deferred tax asset valuation allowance:
            
Years Ended December 31,
2021 2020
Balance at beginning of period $ 1,002  $ — 
Charged to provision for income taxes 332  1,002 
Balance at end of period $ 1,334  $ 1,002 


The Company had approximately $40.0 million of accumulated federal net operating loss as of December 31, 2021, which may be carried forward indefinitely to offset taxable income. The Company had approximately $0.6 million of federal research credit carryforwards as of December 31, 2021. The federal research credits are limited to a 20-year carryforward period and will expire starting in 2041.

The Company had tax effected state net operating loss carryforwards of approximately $1.9 million as of December 31, 2021, which will expire between 2036 and 2041. The Company had $3.1 million of California research credit carryforwards as of December 31, 2021, which may be carried forward indefinitely. The Company also had $0.6 million of Texas research credit carryforwards as of December 31, 2021, which may be carried forward for 20 years and will expire starting in 2037.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits:
Years Ended December 31,
2021 2020 2019
Balance at beginning of period $ —  $ —  $ — 
Increases for tax positions of prior years 609  —  — 
Increases for tax positions of current year 148  —  — 
Settlements (120) —  — 
Balance at end of period $ 637  $ —  $ — 

The Company has analyzed filing positions in all of the federal, state, and foreign jurisdictions where it is required to file income tax returns and for all open tax years. As of December 31, 2021, the Company recorded approximately $0.6 million of unrecognized tax benefits, all of which would impact the effective tax rate, if recognized. The Company does not anticipate that its unrecognized tax benefits will materially change within the next 12 months. The Company’s policy for recording interest and penalties associated with audits and unrecognized tax benefits is to record such items as a component of income tax expense. As of December 31, 2021, income tax expense includes an accrual of $0.1 million for the payment of interest and penalties associated with unrecognized tax benefits.
The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. With few exceptions, the Company is subject to examination for both U.S. federal and state tax returns for the years 2018 to present. In June 2020, the Company was notified by the Internal Revenue Service regarding an examination of the Company’s federal income tax return for the tax year ended December 31, 2017. The examination was concluded in late 2021 and resulted in an audit adjustment of $0.1 million. In late 2019, the Company was notified by the Israel Tax Authority that the Company’s Israel tax returns for the tax years ended December 31, 2016 through 2018 are under examination. The tax years 2016 through 2021 remain open to examination under the statute of limitations by the Israel Tax Authority for Israel. The tax years starting from 2018 remain open to examination by the Hong Kong Inland Revenue Department for Asia. For the remaining jurisdictions, the Company is subject to examination by tax authorities from the date the Company started operations in the respective foreign jurisdiction to present.