|12 Months Ended|
Dec. 31, 2022
|Income Tax Disclosure [Abstract]|
8. Income Taxes
The provision for income taxes consisted of the following for the periods presented:
A reconciliation of the statutory income tax rate provision (benefit) to the Company’s provision (benefit) consisted of the following for the periods presented:
The Company had federal and state net operating loss ("NOL") carryforwards available of $104,097 and $31,808 at December 31, 2022, respectively. The federal NOL carryforwards can be carried forward indefinitely while $31,008 of the state NOL carryforwards have indefinite lives and the remaining amounts will expire between and . The Company had federal interest expense carryforwards of $26,335 at December 31, 2022, which can be carried forward indefinitely. The Company also had state interest expense carryforwards in seven states where the amounts vary by jurisdiction, which also have indefinite lives. The Company had federal general business credits of $3,274 at December 31, 2022, which can be carried forward for 20 years and if unused, will expire between 2037 and 2042.
As noted above, the Company had deferred tax assets related to both federal and state NOL and interest expense carryforwards. When determining the need for a valuation allowance, the Company considers all available positive and negative evidence, including taxable income in prior carryback years (if carryback is permitted under the relevant tax law), the timing of the reversal of existing taxable temporary differences, tax planning strategies and projected future taxable income. The Company adjusts the valuation allowance in the period management determines it is more likely than not that the Company will not realize some or all of the deferred tax assets.
For financial reporting purposes, the Company established valuation allowances of $566 and $122 at December 31, 2022 and 2021, respectively, to offset deferred tax assets. The current and prior year valuation allowance relates to state interest expense carryovers and state net operating losses, respectively.
Past ownership changes and other equity transactions may have triggered Sections 382 and 383 of the Internal Revenue Code, resulting in certain annual limitations on the utilization of existing federal and state net operating losses and credits. Such provisions may limit the potential future tax benefit to be realized by the Company from its accumulated net operating losses and tax credit carryforwards.
On August 9, 2022, the Creating Helpful Incentives to Produce Semiconductors (“CHIPS”) Act of 2022 was signed into law. The CHIPS Act is designed to boost domestic semiconductor manufacturing and encourage US research activities. Later that month, on August 16, 2022, the Inflation Reduction Act (“IRA”) of 2022 was signed into law. The IRA creates a new book-minimum tax on certain large corporations and an excise tax on stock buybacks while also providing incentives to address climate change mitigation and clean energy, among other items. Most of these changes will become effective for the 2023 tax year and after initial evaluation, the Company does not currently expect these laws to have a material effect on the consolidated financial statements.
The income tax benefit recorded in 2022 is different from the expected statutory federal and state tax benefit primarily due to a $4,571 income tax benefit related to equity award exercises and/or vesting in 2022, which is net of the impact of the internal revenue code rules and regulations related to the deductibility of executive compensation by publicly held companies.
The Company files income tax returns in the U.S. federal and various state tax jurisdictions and is subject to varying statutes of limitation in each jurisdiction. As of December 31, 2022, the Company is not under audit for federal or state income tax purposes. In general, the Company’s federal tax return may be subject to examination for the 2019 through 2021 tax years, while for state purposes, the 2018 through 2021 years are generally open to examination, with some states having either a three- or four-year statute of limitations. The Company’s usage of NOL carryovers also permits taxing authorities to adjust aspects of tax returns that may be outside of these statutes of limitation.
The Company’s policy is to recognize interest and penalties related to income tax matters in income tax (benefit) provision. The Company neither accrued for nor recognized any interest or penalties in income tax expense as of December 31, 2022 or 2021. The Company has not accrued for any uncertain tax positions as of December 31, 2022 or 2021 and believes that it is unlikely that there will be a significant increase or decrease of any unrecognized tax benefits within the next twelve months.
No definition available.
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