Income Taxes |
3 Months Ended |
|---|---|
Mar. 31, 2019 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes |
Income Taxes
The Company recorded an income tax provision expense of $0.1 million and an income tax benefit of $4.7 million for the three months ended March 31, 2019 and 2018, respectively. In general, the effective tax rate for the three months ended March 31, 2019 differs from the federal income tax rate due to foreign withholding taxes, changes in valuation allowance, basis difference in convertible debt and effects of permanent differences. In general, the effective tax rate for the three months ended March 31, 2018 differs from the federal income tax rate due to the effects of foreign tax rate differences, foreign withholding taxes, changes in valuation allowance, and deferred tax expense on amortization of indefinite-lived intangible assets.
During the quarter ended March 31, 2019, the Company recorded a $2.7 million adjustment to reduce additional paid-in capital with a corresponding reduction to income tax expense. The adjustment pertains to a difference between the book basis and tax basis of the Second Lien Notes and equity warrants with Searchlight. The initial value assigned to the equity warrants was recorded as an increase to additional paid-in capital, and a corresponding tax implication for the basis difference should have be recorded as an offsetting decrease to additional paid-in capital. This basis difference originated in 2018 and the adjustment was recorded in 2019 to correct an immaterial prior period error.
Due to uncertainty as to the realization of benefits from the Company's U.S. and certain international net deferred tax assets, including net operating loss carryforwards, the Company has a full valuation allowance reserved against such net deferred tax assets. The Company intends to continue to maintain a full valuation allowance on certain jurisdictions’ net deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances.
As of March 31, 2019, and December 31, 2018, the liability for income taxes associated with uncertain tax positions was $7.8 million and $7.9 million, respectively. As of March 31, 2019, and December 31, 2018, the Company had accrued $6.2 million and $6.3 million, respectively, of interest and penalties related to uncertain tax positions. It is reasonably possible that the amount of the unrecognized benefit with respect to certain of the Company’s unrecognized tax positions may significantly decrease within the next 12 months. This change may be the result of settlement of ongoing foreign audits.
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