|12 Months Ended|
Jul. 31, 2021
|Income Tax Disclosure [Abstract]|
Note 7 - Income taxes
The benefit for income taxes for fiscal years ended July 31 is as follows:
During the fiscal year ended July 31, 2019, the Company finalized its computation of the impact of the Tax Cuts and Jobs Act of 2017 with no change to the benefit amount recorded in the prior year.
In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income (“GILTI”) provisions of the Tax Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance allows companies to make an accounting policy election to either (i) account for GILTI as a component of tax expense in the period in which they are subject to the rules (the period cost method), or (ii) account for GILTI in the Company’s measurement of deferred taxes (the deferred method). After completing the analysis of the GILTI provisions, the Company elected to account for GILTI using the period cost method.
On March 27, 2020, the CARES Act was signed into law. The CARES Act includes provisions relating to refundable payroll tax credits, deferment of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. While the Company continues to evaluate the impact of the CARES Act, it does not currently believe it will have a material impact on the Company’s income taxes or related disclosures.
Deferred tax assets and liabilities arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. The components of deferred tax assets (liabilities) as of July 31 are as follows:
The Company recorded a valuation allowance during the years ended July 31, 2021 and 2020 equal to domestic and foreign net deferred tax assets. The Company believes that the valuation allowance is necessary as it is not more likely than not that the deferred tax assets will be realized in the foreseeable future based on positive and negative evidence available at this time. This conclusion was reached because of uncertainties relating to future taxable income, in terms of both its timing and its sufficiency, which would enable the Company to realize the deferred tax assets. For fiscal years 2021 and 2020, the change in the valuation allowance was ($200) and $6,600, respectively.
As of July 31, 2021, the Company had U.S. federal net operating loss carryforwards of approximately $85,600 of which $58,500, if not fully utilized, expire between 2030 and 2038 and which $27,100 do not expire. Utilization is dependent on generating sufficient taxable income prior to expiration of the tax loss carryforwards. In addition, the Company has research and development tax credit carryforwards of approximately $1,500 which expire between 2025 and 2041. As of July 31, 2021, the Company has state and local net operating loss carryforwards of approximately $28,800, which if not fully utilized, expire between 2038 and 2041. As of July 31, 2021, the Company had foreign loss carryforwards of approximately $10,700 which with few exceptions do not expire.
The geographic components of income (loss) before income taxes consisted of the following for the years ended July 31:
The (provision) or benefit for income taxes was at rates different from U.S. federal statutory rates for the following reasons for the years ended July 31:
Because there are no undistributed earnings at the Company’s foreign subsidiaries at July 31, 2021, no U.S. federal income taxes have been provided. As of July 31, 2021, the Company has no liabilities for uncertain tax positions. It is the Company’s policy to record interest and penalties as a component of tax expense. The Company files income tax returns in the U.S. Federal jurisdiction, various U.S. state jurisdictions and several foreign jurisdictions. With few exceptions, the fiscal years that remain subject to examination are July 31, 2018 through July 31, 2021.
During fiscal 2021, the Swiss Federal Tax Administration completed of an examination for the fiscal years 2015 through 2018, which resulted in the tax returns being accepted as filed. During fiscal 2021, the Company received notification from the German tax authorities of an examination for the fiscal years 2015 through 2019. As of July 31, 2021, we had received no preliminary audit findings and no reserves have been recorded with respect to this audit.
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