|12 Months Ended|
Dec. 31, 2022
|Income Tax Disclosure [Abstract]|
|INCOME TAXES||INCOME TAXES
The following table presents income before income taxes used to calculate the provision for income taxes:
The following table presents components of the provision for income taxes:
The following table presents a reconciliation of the differences between income taxes computed by applying the statutory federal income tax rate and "income taxes" recorded in the Company's statements of operations:
Foreign rate differences include tax benefits of $10.3 million, $5.5 million and $3.0 million in 2022, 2021 and 2020, respectively, from statutorily exempt foreign income.
On January 17, 2020, the Swiss canton of Ticino formally adopted The Federal Act on Tax and AVS Financing (“Swiss Tax Act”). Revaluation of deferred income tax asset and liability positions under the Swiss Tax Act had a one-time impact to tax expense of $6.2 million in 2020. During the year ended December 2022, the Company changed the tax jurisdiction for one of its subsidiaries from the Swiss canton of Ticino to Geneva. This required a revaluation of deferred income tax asset and liability positions, resulting in $1.8 million of tax expense in 2022.
The following table presents the components of "deferred income tax assets" and "deferred income tax liabilities" recorded in the Company's balance sheets:
At the end of 2022, the Company is asserting indefinite reinvestment on foreign earnings totaling $90.9 million. The Company has determined the unrecorded deferred tax liability associated with the $90.9 million basis difference is approximately $0.6 million, primarily related to withholding taxes.
The Company has $17.1 million of potential tax benefits for foreign operating loss carryforwards, $15.7 million of which will expire between 2023 and 2031, and foreign tax credit carryforwards of $2.5 million that will expire between 2030 and 2032. In addition, there are $8.6 million of potential tax benefits for state operating loss and credit carryforwards, $8.3 million of which expire between 2023 and 2042.
A valuation allowance has been provided where it is more likely than not that deferred tax assets related to operating loss carryforwards will not be realized. Valuation allowances totaled $16.7 million for available foreign operating loss carryforwards, $6.5 million for available state operating loss and credit carryforwards, and $2.6 million for other foreign deferred income tax assets. During 2022, the Company recorded a tax benefit due to a $0.8 million decrease in valuation allowances related to state operating loss and credit carryforwards as well as other state deferred income tax assets, and a $4.8 million net increase in valuation allowances related to current year foreign operating losses and other deferred income tax assets, inclusive of foreign currency effects.
The following table presents a reconciliation of the change in the accrual for unrecognized income tax benefits:
The unrecognized tax benefits of $15.0 million at the end of 2022, if recognized, would reduce the annual effective tax rate.The Company files a consolidated U.S. federal income tax return, as well as separate and combined income tax returns in numerous state and international jurisdictions. In the U.S., the Company’s 2019 through 2021 tax years remain open and are subject to examination by the Internal Revenue Service. In addition, the Company is currently subject to examination by various state and international tax authorities. Management regularly assesses the potential outcomes of both ongoing and future examinations for the current and prior years and has concluded that the Company’s provision for income taxes is adequate. The outcome of any one examination is not expected to have a material impact on the Company’s financial statements. Management also believes that it is reasonably possible that the amount of unrecognized tax benefits may decrease by $2.4 million within the next 12 months due to expiration of statutes of limitations, all of which would reduce income tax expense.
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/disclosureRef