|12 Months Ended|
Sep. 30, 2022
|Income Tax Disclosure [Abstract]|
12. Income Taxes
Income Tax Provision
The following note related to income taxes summarizes the results from both continuing and discontinued operations. The components of income (loss) before provision for income taxes are as follows, in thousands:
The components of the provision for income taxes are as follows, in thousands:
The CARES Act, which was signed into law on March 27, 2020, included a provision for a five-year carryback of net operating losses. We have assessed the benefit of the provision and utilized a portion of the 2019 net operating loss carryback to offset income from 2018. The income tax provision as of and for the year ended September 30, 2020 reflects such impact.
Due to the tax treatment relating to the sale of Tempress, we realized an income tax benefit of $11.1 million, which is reflected in our discontinued operations in 2020. We realized income tax expense of $0.2 million for the sale of R2D, which is reflected in our continuing operations in 2020. The income tax (benefit) expense is fully offset by a valuation allowance.
A reconciliation of actual income taxes to income taxes at the expected U.S. federal corporate income tax rate is as follows, in thousands, except percentages:
Deferred Income Taxes and Valuation Allowance
Deferred income taxes reflect the tax effects of temporary differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to be realized. The components of deferred tax assets and deferred tax liabilities are as follows, in thousands:
Changes in the deferred tax valuation allowance are as follows, in thousands:
The deferred tax valuation allowance decreased by $3.3 million and increased by $1.6 million for the years ended September 30, 2022 and 2021, respectively. In assessing the realizability of deferred tax assets, we consider 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 generation of future taxable income during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future income and tax planning strategies in making this assessment. We have established valuation allowances on all net U.S. deferred tax assets, after considering all of the available objective evidence, both positive and negative, historical and prospective, with greater weight given to historical evidence, and determined it is not more likely than not that these assets will be realized. We have established a partial valuation allowance on certain foreign deferred tax assets that we consider it is more likely than not will not be realized.
We intend to permanently reinvest undistributed earnings of our foreign subsidiaries. It is not practicable to estimate the amount of tax that might be payable on the undistributed amounts.
Net Operating Losses
As of September 30, 2022, we have federal net operating loss carryforwards of approximately $10.0 million that expire at various times between 2032 and 2035. The utilization of those federal net operating losses is limited to approximately $0.8 million per year. Additionally, we have federal net operating loss carryforwards of approximately $68.0 million that have an indefinite carryforward period. The utilization of those federal net operating losses is limited to 80% of taxable income after 2021. We have no foreign net operating loss carryforwards as of September 30, 2022. We have approximately $14.0 million of state net operating loss carryforwards, with various expiration dates and limitations on utilization, depending on the state. As of September 30, 2022, we have approximately $0.8 million of Foreign Tax Credit carryforwards that expire in 2030 and 2031.
Uncertain Tax Positions
We have included all of our liabilities for uncertain tax positions with income taxes payable long-term. A reconciliation of the beginning and ending amount of our unrecognized tax benefits is summarized as follows (in thousands):
Approximately $1.0 million of our total unrecognized tax benefits, inclusive of penalties and interest, represents the amount that, if recognized, would favorably affect our effective income tax rate in future periods. We report accrued interest and penalties related to unrecognized tax benefits in income tax expense. We recognized a net (benefit) expense for interest and penalties of $0.1 million, $(0.1) million and $4,000 for 2022, 2021 and 2020, respectively. Income taxes payable long-term on the Consolidated Balance Sheets includes a cumulative accrual for potential interest and penalties of $0.7 million and $0.6 million as of September 30, 2022 and 2021, respectively. We do not expect that the amount of our tax reserves for uncertain tax positions will materially change in the next 12 months other than the continued accrual of interest and penalties.
Tax Return Matters
We file income tax returns in China and other foreign jurisdictions, as well as the U.S. and various states in the U.S. We have not signed any agreements with the Internal Revenue Service, any state or foreign jurisdiction to extend the statute of limitations for any fiscal year. As such, the number of open years is the number of years dictated by statute in each of the respective taxing jurisdictions. U.S. Federal tax returns generally have a 3-year statute of limitations. Therefore, U.S. federal returns for tax years ending on or after September 30, 2019 remain open for examination. In addition, the statute for a tax year for which a loss was carried back to remains open for the same period as the year the loss originated. Because the Company filed a net operating loss carryback claim for the tax year ended September 30, 2016 for a loss originating in the tax year ended September 30, 2019, the statute for the carryback claim in 2016 will remain open until 2023. Furthermore, the IRS may adjust attribute carryforwards utilized in an open year even though the year the attributes originated may be closed. State and foreign statutes are generally 3 to 5 years but vary by jurisdiction. These open years contain certain matters that could be subject to differing interpretations of applicable tax laws and regulations as they relate to the amount, timing, or inclusion of revenues and expenses, or the sustainability of income tax positions of Amtech and our subsidiaries.
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