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Note 17. Income Taxes
The provision for income taxes consists of the following (amount in thousands):
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|
|
|
|
|
|
|
|
December 31, |
|
|
2021 |
|
2020 |
Current provision: |
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|
|
|
|
|
Federal |
|
$ |
— |
|
$ |
— |
State |
|
|
92 |
|
|
38 |
Total current |
|
|
92 |
|
|
38 |
Deferred benefit: |
|
|
|
|
|
|
Federal |
|
|
(2,983) |
|
|
(38) |
State |
|
|
(356) |
|
|
(8) |
Total deferred |
|
|
(3,339) |
|
|
(46) |
Income tax benefit |
|
$ |
3,247 |
|
$ |
8 |
A reconciliation of the statutory U.S. federal rate to the Company’s effective tax rate consists of the following (amount in thousands):
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|
|
|
|
|
|
|
|
|
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For the Years Ended December 31, |
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|
|
2021 |
|
2020 |
|
Provision for federal income taxes at statutory rates |
|
3,305 |
|
(21) |
% |
284 |
|
(21) |
% |
Provision for state income taxes, net of federal benefit |
|
200 |
|
(1) |
% |
(0.2) |
|
— |
% |
Change in valuation allowance |
|
(203) |
|
1 |
% |
(272) |
|
20 |
% |
Nondeductible expenses |
|
(55) |
|
— |
% |
(4) |
|
— |
% |
Return to provision adjustments |
|
— |
|
— |
% |
0.7 |
|
— |
% |
Other |
|
— |
|
— |
% |
(0.6) |
|
— |
% |
Income tax benefit |
|
3,247 |
|
21 |
% |
8 |
|
1 |
% |
Effective Tax Rate |
|
20.6 |
% |
|
|
0.63 |
% |
|
|
The tax effects of the temporary differences and carryforwards that give rise to the deferred tax assets consist of the following (amount in thousands):
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|
|
|
|
|
|
|
|
December 31, |
|
|
2021 |
|
2020 |
Deferred tax assets |
|
|
|
|
|
|
Net operating loss carryforward |
|
$ |
5,581 |
|
$ |
2,103 |
Property and equipment |
|
|
— |
|
|
6 |
Intangibles |
|
|
— |
|
|
(39) |
Reserves |
|
|
47 |
|
|
15 |
Share based compensation |
|
|
713 |
|
|
— |
Interest expense carryforward |
|
|
43 |
|
|
53 |
Research and development credits |
|
|
35 |
|
|
— |
Lease liability |
|
|
1,009 |
|
|
101 |
Basis in partnership |
|
|
3 |
|
|
— |
Charitable contributions carryover |
|
|
16 |
|
|
5 |
Total deferred tax assets |
|
|
7,447 |
|
|
2,244 |
Deferred tax liabilities |
|
|
|
|
|
|
Property and equipment |
|
|
(66) |
|
|
— |
Intangibles |
|
|
(3,432) |
|
|
— |
Internally developed software |
|
|
(877) |
|
|
(173) |
Share based compensation |
|
|
— |
|
|
(126) |
Right-of-Use assets |
|
|
(991) |
|
|
(100) |
Prepaid expenses |
|
|
(229) |
|
|
(198) |
Total deferred tax liabilities |
|
|
(5,595) |
|
|
(596) |
Valuation allowance |
|
|
(1,852) |
|
|
(1,648) |
Deferred tax asset, net |
|
$ |
— |
|
$ |
— |
As of December 31, 2021, and December 31, 2020, the Company had federal net operating loss carryforwards of approximately $24.3 million and $9.2 million and state net operating loss carryforwards of approximately $12.8 million and $4.5 million, respectively. Losses will begin to expire, if not utilized, in 2032. Utilization of the net operating loss carryforwards may be subject to an annual limitation according to Section 382 of the Internal Revenue Code of 1986 as amended, and similar provisions.
The Company applies the standards on uncertainty in income taxes contained in ASC Topic 740, Accounting for Income Taxes. The adoption of this interpretation did not have any impact on the Company’s consolidated financial statements, as the Company did not have any significant unrecognized tax benefits during the years ended December 31, 2021 and 2020. Currently, the statute of limitations remains open subsequent to and including the year ended December 31, 2018.
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