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Income Taxes
 3 Months Ended
Mar. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

NOTE 10. Income Taxes

 

Deferred Tax Asset and Valuation Allowance. Prior to June 30, 2023, the Company concluded a valuation allowance was required against its deferred tax assets. In reaching this conclusion, in accordance with U.S. GAAP, the Company evaluated all available evidence, both positive and negative, and determined that the Company’s history of recent losses, primarily due to the goodwill and indefinite-lived intangible asset impairments, was significant negative evidence to require a valuation allowance. Therefore, the Company recorded a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized in future periods. At each reporting date, the Company evaluates the realizability of its deferred tax assets to determine whether a valuation allowance is warranted.

As of June 30, 2023, the Company evaluated all available evidence and determined that the Company's recent performance and future projections enabled the Company to release a significant portion of the Company's valuation allowance that was previously recorded. There was no change to the Company’s position or valuation allowance balance during the three months ended March 31, 2024.

 

Effective Tax Rate. The effective income tax rate, expressed by calculating the Income tax expense as a percentage of income before income tax, differed from the statutory federal income tax rate of 21%, primarily due to the tax benefits realized on stock-based compensation, as well as tax credits, partially offset by the tax impact of non-deductible contingent consideration and earnouts.