Tucows 2015 Annual Report Download - page 205

10. Income taxes:
The provision for income taxes differs from the amount computed by applying the statutory federal income tax
rate of 34% to income before provision for income taxes as a result of the following:
Year ended
December 31,
2015
Year ended
December 31,
2014
Year ended
December 31,
2013
Income for the year before provision for income taxes $ 17,942,957 $ 9,428,325 $ 5,799,803
Computed expected tax expense $ 6,100,605 $ 3,205,631 $ 1,971,933
Increase (reduction) in income tax expense resulting from:
State income taxes 265,489 64,056 14,500
Permanent differences, including foreign exchange 278,959 192,260 13,700
Investment tax credits recovered — — (115,455)
Other, including alternative minimum tax and adjustments to
opening deferred tax assets (75,826)(407,718)(265,339)
Provision for income taxes $ 6,569,227 $ 3,054,229 $ 1,619,339
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and
liabilities as of December 31, 2015 and 2014 are presented below:
December 31,
2015
December 31,
2014
Deferred tax assets:
Deferred revenue $ 5,454,284 $ 5,294,767
Foreign tax credit 1,529,075 3,200,961
Amortization (883,466) (414,345)
Accruals, including foreign exchange and other 1,521,199 (702,764)
Deferred tax assets $ 7,621,092 $ 7,378,619
Deferred income tax asset, current portion $ 3,243,718 $ 2,498,196
Deferred income tax asset, long-term portion 4,377,374 4,880,423
$ 7,621,092 $ 7,378,619
Deferred tax liabilities:
Limited life intangible assets $ (169,731)$ (208,620)
Indefinite life intangible assets (4,706,960)(4,578,731)
Total deferred tax liability, long-term portion $ (4,876,691)$ (4,787,351)
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that
some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the years in which those temporary differences become
deductible. Management considers projected future taxable income, uncertainties related to the industry in which the
Company operates, and tax planning strategies in making this assessment.
The Company had approximately $0.1 million of total gross unrecognized tax benefit as of December 31, 2015
and as of December 31, 2014, which if recognized would favorably affect its income tax rate in future periods. The
unrecognized tax benefit relates primarily to prior year Pennsylvania state franchise taxes and other insignificant U.S. state
taxes.
F-24
Page 20
5
of 22
5
tcx20151201_10k.ht
m
9
/
13
/
201
6
https://www.sec.gov/Archives/edgar/data/909494/000143774916027177/tcx20151201_10...