|12 Months Ended|
Dec. 31, 2016
|INCOME TAXES [Abstract]|
NOTE 17 – INCOME TAXES
The provision for income taxes consisted of the following:
The difference between the effective tax rate in income tax expense and the Federal statutory rate of 35% for the years ended December 31, 2016, 2015, and 2014, is as follows:
The Texas margin tax rate was reduced in a legislative reduction effective January 1, 2015. Permanent differences are primarily due to the Federal manufacturer’s deduction, research and development credit, and stock options.
Tax effects of temporary differences that give rise to significant portions of federal and state deferred tax assets and deferred tax liabilities were as follows:
The current and non-current classifications of the deferred tax balances are as follows:
We have provided a valuation allowance in 2016 and 2015 against certain deferred tax assets because of uncertainties regarding their realization.
We had no Saudi Arabian income tax expense or liability in 2016, 2015, or 2014.
We file an income tax return in the U.S. federal jurisdiction and a margin tax return in Texas. We received notification from the Internal Revenue Service (“IRS”) in November 2016 on the selection of the December 31, 2014, tax return for audit. The audit is ongoing, and we do not expect any adjustment to the return. If any issues addressed in the audit are resolved in a manner not consistent with our expectations, provisions will be adjusted in the period the resolution occurs. Tax returns for various jurisdictions remain open for examination for the years 2013 through 2016.
During 2016 we performed analysis, documentation, and interview of relevant personnel relative to base period and qualifying expenditures with regard to potential research and development (“R&D”) credits for the years ending December 31, 2014 and 2015. We expect to file amended returns for the respective years generating net benefits of federal and state taxes of approximately $524,000, which have been recorded in this period decreasing the overall tax rate. The calculation is inherently complex and many factors influence the ultimate credit.
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/presentationRef