|12 Months Ended|
Dec. 31, 2020
|Income Tax Disclosure [Abstract]|
12. INCOME TAXES
The Company files tax returns in United States (“U.S.”) Federal, state and local jurisdictions, plus Argentina and the United Kingdom (“U.K.”).
United States and international components of loss before income taxes were as follows:
The income tax provision (benefit) consisted of the following:
For the years ended December 31, 2020 and 2019, the expected tax expense (benefit) based on the statutory rate is reconciled with the actual tax expense (benefit) as follows:
As of December 31, 2020 and 2019, the Company’s deferred tax assets consisted of the effects of temporary differences attributable to the following:
As of December 31, 2020, the Company has approximately $69,100,000 of gross U.S. federal net operating losses (“NOLs”), which includes approximately $1,500,000 of GGI 2019 NOLs which is no longer part of the consolidated tax group because GGH’s ownership interest is now less than 80%. Approximately $52,400,000 of the federal NOLs will expire from 2021 to 2037 and approximately $16,700,000 have no expiration date. These NOL carryovers are subject to annual limitations under Section 382 of the U.S. Internal Revenue Code because there was a greater than 50% ownership change, as determined under the regulations, on or about June 30, 2012. We have determined that, due to those annual limitations under Section 382, an additional $6,300,000 of NOLs will expire unused and are not included in the available NOLs stated above. Therefore, we have reduced the related deferred tax asset for NOL carryovers by approximately $2,810,000 from June 30, 2012 forward. The Company’s NOLs generated through the date of the ownership change on June 30, 2012 are subject to an annual limitation of approximately $1,000,000. The Company remains subject to the possibility that a greater than 50% ownership change could trigger additional annual limitations on the usage of NOLs.
As of December 31, 2020, the Company has approximately $53,700,000 and $30,100,000 of gross New York State and New York City NOLs, each of which includes approximately $1,500,000 of GGI 2019 NOLs. All of the state and local NOLs will expire from 2035 to 2038. During the year ended December 31, 2020, the Company wrote-off all of the approximately $3,500,000 and $1,900,000 of state and local deferred tax assets (and reduce the valuation allowance by a corresponding amount) associated with the state and local NOLs because the Company no longer has taxable income or losses which are apportioned to New York State or New York City and, at the present time, doesn’t expect to realize the benefits of those NOLs.
As of December 31, 2020, the Company has approximately $450,000 of gross U.K. NOL carryovers, which do not expire. During the year ended December 31, 2020, the Company wrote-off all of the approximately $90,000 of deferred tax assets (and reduce the valuation allowance by a corresponding amount) associated with the U.K. NOLs because the Company no longer has operations subject to UK income taxes and, at the present time, doesn’t expect to realize the benefits of those NOLs. In addition, the Company had approximately $70,000 of Argentine tax credits which may be carried forward 10 years and begin to expire in 2021.
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the future generation of taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and taxing strategies in making this assessment. Based on this assessment, management has established a full valuation allowance against all of the net deferred tax assets for each period, since it is more likely than not that all of the deferred tax assets will not be realized. The valuation allowances for the years ended December 31, 2020 and 2019 decreased by approximately $5,669,000 (which was impacted by the write-offs described above) and $6,000, respectively.
Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s consolidated financial statements as of December 31, 2020 and 2019. The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of the reporting date. The Company has U.S. tax returns subject to examination by tax authorities beginning with those filed for the year ended December 31, 2017 (or the year ended December 31, 2001 if the Company were to utilize its NOLs). No tax audits were commenced or were in process during the years ended December 31, 2020 and 2019. The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as general and administrative expenses in the consolidated statements of operations.
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