Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.20.4
Income Taxes
12 Months Ended
Dec. 31, 2020
Income Taxes  
Income Taxes

8.  Income Taxes

 

Deferred tax attributes resulting from differences between the tax basis of assets and liabilities and the reported amounts in the consolidated balance sheet are as follows: 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

 

 

    

2020

    

2019

 

Deferred tax assets:

 

 

 

 

 

 

 

Accruals and reserves

 

$

483

 

$

383

 

Deferred rent credit

 

 

175

 

 

139

 

Depreciation and amortization

 

 

 7

 

 

 —

 

Total deferred tax assets

 

 

665

 

 

522

 

Deferred tax liabilities:

 

 

 

 

 

 

 

Accruals and reserves

 

 

(9)

 

 

 —

 

Depreciation and amortization

 

 

(2,010)

 

 

(266)

 

Total deferred tax liabilities

 

 

(2,019)

 

 

(266)

 

Net deferred tax (liabilities) asset

 

$

(1,354)

 

$

256

 

 

The provision for income taxes is as follows:

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

 

    

2020

    

2019

 

Current:

 

 

 

 

 

 

 

Federal

 

$

1,339

 

$

1,740

 

State

 

 

263

 

 

412

 

Foreign

 

 

314

 

 

220

 

 

 

 

1,916

 

 

2,372

 

Deferred:

 

 

 

 

 

 

 

Federal

 

 

(134)

 

 

(120)

 

State

 

 

(28)

 

 

 9

 

Foreign

 

 

(8)

 

 

 —

 

 

 

 

(170)

 

 

(111)

 

 

 

$

1,746

 

$

2,261

 

Effective Tax Rate

 

 

28.1

%  

 

25.0

%

 

The reasons for the difference between total tax expense and the amount computed by applying the U.S. statutory federal income tax rate to income before income taxes are as follows:

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

 

    

2020

    

2019

 

Statutory rate applied to pretax income

 

$

1,309

 

$

1,900

 

Acquisition related costs

 

 

319

 

 

 —

 

Stock compensation

 

 

(59)

 

 

 —

 

Dividends

 

 

(19)

 

 

 —

 

Other permanent items

 

 

19

 

 

27

 

State income taxes, net of federal income tax benefit

 

 

182

 

 

269

 

Foreign income taxes over U.S. statutory rate

 

 

(1)

 

 

28

 

Other items

 

 

(4)

 

 

37

 

Income tax expense

 

$

1,746

 

$

2,261

 

 

The Company has analyzed filing positions in all the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The Company has identified its federal consolidated tax return, its state tax return in New Jersey, its Canadian tax return and its tax return in the United Kingdom as major tax jurisdictions. As of December 31, 2020, the Company’s 2017 through 2019 Federal tax returns remain open for examination. The Company’s New Jersey and Canadian tax returns are open for examination for the years 2016 through 2019. The Company’s tax return in the United Kingdom is open for examination for the years 2019 and 2020. The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. The Company believes that it has appropriate support for the income tax positions it takes and expects to take on its tax returns, and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including experience and interpretations of tax law applied to the facts of each matter.

 

For financial reporting purposes, income before income taxes includes the following components:

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31,

 

 

    

2020

    

2019

 

United States

 

$

4,767

 

$

8,155

 

Foreign

 

 

1,453

 

 

893

 

 

 

$

6,220

 

$

9,048

 

 

 

The Company has approximately $6.7 million of undistributed earnings in Canada, which it continues to reinvest indefinitely, and therefore no withholding taxes related to its repatriation has been recorded.

 

The following table summarizes the activity related to the Company’s unrecognized tax benefits as of December 31, 2020 and 2019:

 

 

 

 

 

 

 

 

 

 

2020

    

2019

Balance as of January 1

 

$

49

 

$

541

Additions related to prior period tax positions

 

 

 -

 

 

 -

Reductions related to settlements with tax authorities

 

 

(49)

 

 

(492)

Balance as of December 31

 

$

 -

 

$

49

 

During the years ended December 31, 2020 and 2019, the Company incurred interest and penalties of less than $0.1 million, respectively, related to these uncertain tax benefits.