Semiconductor Equipment & Materials Intl

PART X, LINE 2:

“Semi is a not-for-profit organization recognized by the irs and ftb as exempt from federal and state income taxes in the united states. However, certain activities of subsidiaries or branches in other countries, such as trade shows, are subject to foreign income taxes or other taxes on income generated in their respective jurisdictions. Net income tax expense was as follows for the years ended december 31 (in thousands): 2019 2018 current $2,269 $516 deferred (25) (39) ------------------------------------------------------------ total income taxes $2,244 $477 net deferred tax assets are included in deferred expenses and other current assets on the consolidated statements of financial position and approximated $180,000 and $150,000 at december 31, 2019 and 2018, respectively. The sources resulting in net deferred tax assets consist principally of deferred revenues and deferred expenses related to exhibitions, accruals, and depreciation. Additionally, the group generates unrelated business income, primarily from its advertising activities. These activities have historically generated losses and semi has accumulated net operating loss carryforwards ("nols"). As of december 31, 2019 and 2018, semi had nols of approximately $5,499,000 and $5,475,000, respectively. The nols will begin to expire after the year ending december 31, 2021. The ability to utilize the nols or realize any benefits is uncertain, and therefore a full valuation allowance has been applied against them. No valuation allowance other than nols described in the preceding paragraph was recorded at december 31, 2019 and 2018, as the group concluded that all of the deferred tax assets will be realized in future years. Net deferred assets are recorded as deferred expenses and other current assets on the consolidated statements of financial position and any change is recorded as management and general expenses on the consolidated statement of activities and changes in net assets. On december 22, 2017, the tax cuts and jobs act (the "2017 tax act") was enacted. The 2017 tax act includes a number of changes to existing u.s. Tax laws that impact the group, most notably a reduction of the u.s. Corporate income tax rate from 35 percent to 21 percent for tax years beginning after december 31, 2017. The group measures deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid. Accordingly, the group's deferred tax assets and liabilities were re-measured to reflect the reduction in the u.s. Corporate income tax rate from 35 percent to 21 percent. On march 27, 2020, the president of the united states signed the coronavirus aid, relief, and economic security act ("cares act"). Provisions under the cares act include changes to permit net operating losses arising in tax years beginning after december 31, 2017 and before january 1, 2021 to be carried forward indefinitely and carried back five years. The cares act also provides for increases to the 30% adjusted taxable income limitation to 50% for tax years beginning in 2019 and 2020, as well as a technical correction of qualified improvement property, and deferral of income tax filings and payments which the company is currently evaluating. The new law also includes certain payroll tax benefits. The enactment of the cares act does not have a material impact on the group's income taxes. The group's total gross unrecognized tax benefits are classified as current and non-current liabilities in the consolidated statements of financial position. As of december 31, 2019 and 2018, the total amount of gross unrecognized tax benefits was approximately $1,724,000 and $646,000, respectively, which results entirely from foreign taxes. The aggregate changes in the balance of gross unrecognized tax benefits, which includes interest and penalties, are as follows (in thousands): balance as of january 1, 2018 $788 -----------------------------------”