|12 Months Ended|
Dec. 31, 2022
|Income Tax Disclosure [Abstract]|
|INCOME TAXES||INCOME TAXES
Income from continuing operations before provision (benefit) for income taxes are taxed under the following jurisdictions (dollar amounts in thousands):
Components of the provision (benefit) for income taxes for each of the two years in the period ended December 31, 2022 are as follows (dollar amounts in thousands):
The provision (benefit) for income taxes, as a percentage of income from continuing operations before provision (benefit) for income taxes, differs from the statutory U.S. federal income tax rate due to the following:
Adjustments relating to the U.S. impact of foreign operations decreased the effective tax rate by 8.6 percentage points and 6.3 percentage points in 2022 and 2021, respectively. The components of this calculation were:
The significant components of the deferred tax assets (liabilities) are as follows (dollar amounts in thousands):
The components of deferred tax assets (liabilities), net are as follows (dollar amounts in thousands):
We have elected the period cost method (costs are treated as a current period expense when incurred) under U.S. GAAP as it relates to GILTI income inclusions in U.S. taxable income. Each reporting period we analyze our indefinite reinvestment assertions with respect to undistributed foreign earnings. As of December 31, 2022, we continue to assert that we do not intend to reinvest undistributed foreign earnings indefinitely in our foreign subsidiaries.
We have provided a valuation allowance of $18.0 million and $8.7 million as of December 31, 2022 and 2021, respectively, for certain deferred tax assets, including foreign net operating losses, for which we cannot conclude it is more likely than not that they will be realized. We reviewed our tax positions and increased the valuation allowance by approximately $9.4 million in 2022 primarily due to a domestic increase of $7.5 million and a foreign increase of $1.9 million. For financial reporting purposes, the increase in valuation allowances increases income tax expenses in the year recorded. At December 31, 2022, we had approximately $15.4 million of foreign tax and withholding credits. Of the $15.4 million credits, $15.0 million are foreign tax credits, most of which expire in 2024 and a majority of which are offset by a valuation allowance.
At December 31, 2022, foreign subsidiaries had unused operating loss carryovers for tax purposes of approximately $5.1 million, tax effected. The net operating losses will expire at various dates from 2023 through 2034, with the exception of those in some foreign jurisdictions where there is no expiration. The foreign net operating losses have a valuation allowance recorded against the portion expected to expire before utilization.
We are subject to regular audits by federal, state and foreign tax authorities. These audits may result in additional tax liabilities. We believe we have appropriately provided for income taxes for all years. Several factors drive the calculation of our tax reserves. Some of these factors include: (i) the expiration of various statutes of limitations; (ii) changes in tax law and regulations; (iii) the issuance of tax rulings; and (iv) settlements with tax authorities. Changes in any of these factors may result in adjustments to our reserves, which would impact our reported financial results.
Our U.S. federal income tax returns for 2019 through 2021 are open to examination for federal tax purposes. We have several foreign tax jurisdictions that have open tax years from 2017 through 2021.
The total outstanding balance for liabilities related to unrecognized tax benefits at December 31, 2022 and 2021 was $0.2 million and $0, respectively, all of which would favorably impact the rate if recognized. Included in these amounts is approximately $0.1 million and $0, respectively, of combined interest and penalties. We increased interest and penalties approximately $0.1 million for the year ended December 31, 2022 and decreased interest and penalties approximately $36,000 for the year ended December 31, 2021. We account for interest expense and penalties for unrecognized tax benefits as part of our income tax provision.
During the years ended December 31, 2022 and 2021, we added approximately $0.2 million and $0, respectively to our liability for unrecognized tax benefits. In addition, we recorded a benefit related to the lapse of applicable statute of limitations of approximately $0 and $0.1 million for the years ended December 31, 2022 and 2021, respectively, all of which favorably impacted our effective tax rate.
A reconciliation of the beginning and ending amount of liabilities associated with uncertain tax benefits, excluding interest and penalties, is as follows for the years (dollar amounts in thousands):
We do not anticipate a significant change to liabilities related to unrecognized tax benefits within the next twelve months and do not have any unrecognized tax benefits that, if recognized, would affect the effective tax rate.
Although we believe our estimates are reasonable, we can make no assurance that the final tax outcome of these matters will not be different from that which it has reflected in our historical income tax provisions and accruals. Such differences could have a material impact on our income tax provision and operating results in the period in which we make such determination.
No definition available.
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