Skillsoft Corporation General form of registration statement for all companies including face-amount certificate companies

Taxes (Tables)

5 Months Ended

12 Months Ended

Jan. 31, 2021

Dec. 31, 2020

The income tax provision consists of the following:


	December 31,		December 31,
	2020		2019

Federal
Current expense	$	495,442	$	1,237,860
Deferred (benefit) expense		(157,029)		9,657

State and Local
Current		—		—
Deferred		—		—

Change in valuation allowance		148,348		—

Income tax provision	$	486,761	$	1,247,517

A reconciliation of the federal income tax rate to the Company’s effective tax rate is as follows:


	December 31,		December 31,
	2020		2019

Statutory federal income tax rate	21.0	%	21.0	%
State taxes, net of federal tax benefit	0.0	%	0.0	%
Transaction costs attributable to Initial Public Offering	0.0	%	(1.8)	%
Loss on conversion option liability	(0.5)	%	0.0	%
Loss on warrant liability	(6.3)	%	(28.5)	%
Loss on Prosus agreement	(14.7)	%	0.0	%
Valuation allowance	(0.2)	%	0.0	%
Income tax provision	(0.7)	%	(9.3)	%

The following is a summary of the Company's net deferred tax asset (liability):


	December 31,		December 31,
	2020		2019

Deferred tax asset (liability)
Startup and organizational expenses	$	148,348	$	—
Unrealized gain on marketable securities		(976)		(9,657)
Total deferred tax asset (liability)		147,372		(9,657)
Valuation Allowance		(148,348)		—
Deferred tax asset (liability), net of allowance	$	(976)	$	(9,657)

Significant components of the income tax benefit (provision) consist of the following (in thousands):


	Successor		Predecessor
	August 28, 2020		February 1, 2020		Year Ended		Year Ended
	through January 31,		through August 27,		January 31,		January 31,
	2021		2020		2020		2019
CURRENT:
Luxembourg	$	—	$	—	$	—	$	—
Ireland		(268)		333		1,099		1,559
United States		1,012		588		2,405		652
Other foreign locations		462		1,300		1,949		3,231
Current tax provision		1,206		2,221		5,453		5,442
DEFERRED:
Luxembourg		2,594		—		—		—
Ireland		(1,856)		43,483		8,533		1,517
United States		(19,265)		17,256		(2,693)		(1,906)
Other foreign locations		(4,613)		5,495		(81)		(26)
Deferred tax (benefit) / provision		(23,140)		66,234		5,759		(415)
Income tax (benefit) / provision	$	(21,934)	$	68,455	$	11,212	$	5,027

The following table presents the U.S. and foreign components of (loss) income before income taxes (in thousands):


	Successor		Predecessor
	August 28, 2020		February 1, 2020		Year Ended		Year Ended
	through January 31,		through August 27,		January 31,		January 31,
	2021		2020		2020		2019
Luxembourg	$	9,220	$	—	$	—	$	—
Ireland		(3,741)		2,437,738		(645,360)		(336,002)
United States		(86,333)		364,827		(197,600)		(62,805)
Other foreign locations		(34,802)		29,902		4,967		3,995
(Loss) income before income taxes	$	(115,656)	$	2,832,467	$	(837,993)	$	(394,812)


	Successor		Predecessor
	August 28, 2020		February 1, 2020		Year Ended		Year Ended
	through January 31,		through August 27,		January 31,		January 31,
	2021		2020		2020		2019
Income tax provision (benefit) at
Luxembourg (24.9%) / Irish statutory rate (12.5%)	(24.9)	%	12.5	%	(12.5)	%	(12.5)	%
Increase (decrease) in tax resulting from:
US State income taxes, net of federal benefit	(5.7)		(0.2)		(0.2)		(0.8)
Foreign rate differential	6.1		(0.2)		(1.9)		(1.2)
Other permanent items	(0.1)		0.7		1.2		2.5
Transaction costs	(7.6)		0.2
Unrecognized tax benefit	(0.4)		—		0.2		0.3
Change in valuation allowance	3.5		(4.2)		5.5		9.6
Impairment of goodwill	—		0.8		7.9		—
Reorganization and fresh start adjustments	9.6		(7.3)		—		—
Other	0.5		0.1		1.2		3.4
Effective tax rate – provision (benefit)	(19.0)	%	2.4	%	1.4	%	1.3	%

Significant components of the Company’s deferred tax assets and liabilities as of the periods presented were as follows (in thousands):


	Successor		Predecessor
	January 31, 2021		January 31, 2020
ASSETS:
Net operating loss carryforwards	$	13,517	$	29,753
Deferred interest expense		35,852		145,399
Customer relationships		—		6,888
Reserves and accruals		9,038		7,204
Lease liabilities		3,862		—
Tax credits		99		5,893
Transaction costs		19,532		4,216
Other intangibles		3,505		7,237
Gross deferred tax assets		85,405		206,590
Less: Valuation allowance		(45,567)		(160,531)
Net deferred tax assets	$	39,838	$	46,059
LIABILITIES:
Intangibles	$	(99,587)	$	(78,017)
Property and equipment, net		(2,971)		(5,665)
Accrued Interest		(4,522)		—
Right-of-use asset		(3,141)		—
Deferred revenue		(6,199)		—
Other		(4,426)		—
Gross deferred tax liabilities		(120,846)		(83,682)
Total net deferred tax liabilities, net	$	(81,008)	$	(37,623)


	Successor		Predecessor
	August 28, 2020		February 1, 2020		Year Ended		Year Ended
	through January 31,		through August 27,		January 31,		January 31,
	2021		2020		2020		2019
Unrecognized tax benefits, beginning balances	$	3,768	$	3,773	$	2,081	$	5,035
Increases for tax positions taken during the current period		—		—		—		—
Increases for tax positions taken during a prior period		37		35		1,987		915
Decreases for tax positions taken during a prior period		—		(40)		(295)		(3,736)
Other		452		—		—		—
Decreases resulting from the expiration of statute of limitations		(339)		—		—		(133)
Unrecognized tax benefits, ending balance	$	3,918	$	3,768	$	3,773	$	2,081