Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.23.1
Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of the provision (benefit) for income taxes, in the consolidated statements of operations are as follows (in thousands):
For the years ended
December 31, 2022 December 31, 2021
Continuing Operations    
Current    
Federal $ 1,040  $ — 
State 3,543  1,318 
$ 4,583  $ 1,318 
Deferred    
Federal 72  (1,511)
State (210) (775)
$ (138) $ (2,286)
Income taxes from continuing operations $ 4,445  $ (968)
A reconciliation of the statutory federal income tax expense (benefit) to the effective tax is as follows (in thousands):
  2022 2021
Statutory Rate - federal $ 4,811  $ 1,232 
State taxes, net of federal benefit 2,789  366 
Research & development tax credit (1,200) — 
Permanent differences and other (601) 227 
Income taxes from continuing operations before valuation allowance $ 5,799  $ 1,825 
Change in valuation allowance (1,354) (2,793)
Income tax expense (benefit) $ 4,445  $ (968)
Total $ 4,445  $ (968)
The tax effects of the primary “temporary differences” between values recorded for assets and liabilities for financial reporting purposes and values utilized for measurement in accordance with tax laws giving rise to our deferred tax assets are as follows (in thousands):
  For the years ended
  December 31, 2022 December 31, 2021
Net operating loss and capital loss carryforward $ 1,324  $ 3,584 
Right of use asset (1,466) 1,348 
Other 2,684  2,531 
Capital lease obligations 1,466  (1,348)
Depreciation (705) (948)
Amortization (2,703) (2,989)
Valuation allowance (824) (2,178)
Total $ (224) $ — 
The Company accounts for income taxes under ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies various aspects related to accounting for income taxes. This standard became effective for the Company January 1, 2021. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.
The Company recognizes tax assets and liabilities for the future tax consequences related to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for net operating loss carryforwards. Management evaluated the deferred tax assets for recoverability using a consistent approach that considers the relative impact of negative and positive evidence, including historical profitability and projections of future reversals of temporary differences and future taxable income. The Company is required to establish a valuation allowance for deferred tax assets if management determines, based on available evidence at the time the determination is made, that it is not more likely than not that some portion or all of the deferred tax assets will be realized.

As of December 31, 2022 the Company has net deferred tax liabilities for federal and combined state jurisdictions after releasing the valuation allowance in those jurisdictions. The Company continues to maintain a valuation allowance against some of the separate company state NOL carryforwards. As of December 31, 2022 there is a valuation allowance of $0.8 million compared to $2.2 million as of December 31, 2021. As of December 31, 2022, the Company has state NOL carryforwards of $0.8 million, which begin to expire in 2024 and federal NOL carryforwards of $0.5 million which can be carried forward indefinitely. The federal NOL is attributable to 2021 Nebula acquisition, and it is Section 382 limited with an annual limitation of $0.6 million.
The Company files a consolidated federal income tax return and separate company state returns as well as combined state returns where applicable.