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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

Note 14. Income Taxes

 

Selected Information Related to Income Taxes. Significant components of Income before income taxes are as follows (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

U.S.

 

$

71,659

 

 

$

20,917

 

 

$

22,533

 

Non-U.S.

 

 

(9,796

)

 

 

(2,812

)

 

 

43

 

Income before income taxes

 

$

61,863

 

 

$

18,105

 

 

$

22,576

 

 

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Current:

 

 

 

 

 

 

 

 

 

U.S. federal

 

$

(609

)

 

$

11,603

 

 

$

2,991

 

U.S. state and local

 

 

1,198

 

 

 

2,289

 

 

 

1,122

 

Non-U.S.

 

 

1,192

 

 

 

269

 

 

 

(26

)

Total current income tax expense

 

 

1,781

 

 

 

14,161

 

 

 

4,087

 

Deferred:

 

 

 

 

 

 

 

 

 

U.S. federal

 

 

12,210

 

 

 

(95,298

)

 

 

579

 

U.S. state and local

 

 

533

 

 

 

(19,034

)

 

 

671

 

Non-U.S.

 

 

(849

)

 

 

(166

)

 

 

33

 

Total deferred income tax expense (benefit)

 

 

11,894

 

 

 

(114,498

)

 

 

1,283

 

Income tax expense (benefit)

 

$

13,675

 

 

$

(100,337

)

 

$

5,370

 

 

The income tax provision differed from amounts computed at the statutory federal income tax rate, as follows (in thousands, except percentages):

 

 

 

Year Ended December 31,

 

 

 

 

2024

 

 

 

2023

 

 

 

2022

 

 

 

 

$

 

 

%

 

 

 

$

 

 

%

 

 

 

$

 

 

%

 

 

Income tax provision at statutory rate

 

$

12,991

 

 

 

21.0

 

%

 

$

3,803

 

 

 

21.0

 

%

 

$

4,743

 

 

 

21.0

 

%

State income taxes, net of federal income tax expense

 

 

2,182

 

 

 

3.5

 

 

 

 

148

 

 

 

0.8

 

 

 

 

1,122

 

 

 

5.0

 

 

Nondeductible transaction expenses

 

 

2,086

 

 

 

3.4

 

 

 

 

461

 

 

 

2.5

 

 

 

 

(2,608

)

 

 

(11.6

)

 

Nondeductible executive compensation

 

 

2,008

 

 

 

3.2

 

 

 

 

2,771

 

 

 

15.3

 

 

 

 

1,974

 

 

 

8.7

 

 

Uncertain tax positions

 

 

1,216

 

 

 

2.0

 

 

 

 

1,070

 

 

 

5.9

 

 

 

 

(4,042

)

 

 

(17.9

)

 

Stock-based compensation

 

 

(638

)

 

 

(1.0

)

 

 

 

(2,859

)

 

 

(15.8

)

 

 

 

(1,432

)

 

 

(6.3

)

 

Return to provision adjustments

 

 

(1,066

)

 

 

(1.7

)

 

 

 

(2,972

)

 

 

(16.4

)

 

 

 

4,627

 

 

 

20.5

 

 

Valuation allowance

 

 

(2,318

)

 

 

(3.7

)

 

 

 

(101,182

)

 

 

(558.9

)

 

 

 

1,194

 

 

 

5.3

 

 

Tax credits

 

 

(3,300

)

 

 

(5.3

)

 

 

 

(2,462

)

 

 

(13.6

)

 

 

 

(1,455

)

 

 

(6.4

)

 

Other, net

 

 

514

 

 

 

0.7

 

 

 

 

885

 

 

 

5.0

 

 

 

 

1,247

 

 

 

5.5

 

 

Income tax expense (benefit)

 

$

13,675

 

 

 

22.1

 

%

 

$

(100,337

)

 

 

(554.2

)

%

 

$

5,370

 

 

 

23.8

 

%

 

Deferred Tax Assets, Liabilities and Valuation Allowance. The Company has recorded deferred tax assets related to federal and state income tax net operating loss ("NOL") carryforwards of approximately $2.9 million and $2.4 million as of December 31, 2024 and 2023, respectively. These federal NOLs, and certain state NOLs, can be carried forward indefinitely.

 

The Company has also recorded deferred tax assets related to federal and state research and development ("R&D") tax credit carryforwards of $1.9 million and $1.2 million as of December 31, 2024 and 2023, respectively. The federal and state R&D tax credits generally may be carried forward 20 years and 5 years, respectively.

 

The Tax Cuts and Jobs Act enacted in December 2017 amended Internal Revenue Code Section 174 to require that specific research and experimental expenditures be capitalized and amortized over five years (15 years for non-U.S. R&D expenditures) beginning in the Company’s 2022 fiscal year.

 

During 2023, the Company released a significant portion of the valuation allowance that had been previously recorded against its deferred tax assets. In connection with the sale of the Company’s RepairPal equity investment during 2024, the Company released its remaining portion of the valuation allowance. As a result, the Company has no valuation allowance recorded as of December 31, 2024. For more information on the sale, see Note 2 (Significant Accounting Policies).

 

Significant components of the deferred tax assets and liabilities are as follows (in thousands):

 

 

 

December 31,

 

 

 

2024

 

 

2023

 

Deferred income tax liabilities:

 

 

 

 

 

 

Indefinite lived intangibles

 

$

(24,161

)

 

$

(14,203

)

Property and equipment

 

 

(7,309

)

 

 

—

 

Right of use assets

 

 

(4,227

)

 

 

(3,274

)

Other

 

 

(1,402

)

 

 

—

 

Total deferred tax liabilities

 

$

(37,099

)

 

$

(17,477

)

 

 

 

 

 

 

 

Deferred income tax assets:

 

 

 

 

 

 

Goodwill

 

$

55,947

 

 

$

73,172

 

Capitalized research and development costs

 

 

28,677

 

 

 

24,818

 

Definite lived intangibles

 

 

15,204

 

 

 

2,596

 

Accrued compensation

 

 

11,961

 

 

 

12,006

 

Lease obligations

 

 

7,812

 

 

 

6,941

 

Interest expense limitation carryforward

 

 

6,442

 

 

 

—

 

NOL and tax credit carryforwards

 

 

4,813

 

 

 

3,603

 

Other

 

 

—

 

 

 

855

 

Total deferred tax assets

 

 

130,856

 

 

 

123,991

 

Less: Valuation allowance

 

 

—

 

 

 

(2,318

)

Net deferred tax asset

 

$

93,757

 

 

$

104,196

 

 

The deferred tax assets and liabilities recognized in the Company’s Consolidated Balance Sheets as of December 31, 2024 and 2023 were as follows (in thousands):

 

 

 

December 31,

 

 

 

2024

 

 

2023

 

Investments and other assets, net

 

$

100,530

 

 

$

112,953

 

Other noncurrent liabilities

 

 

(6,773

)

 

 

(8,757

)

Net deferred tax asset

 

$

93,757

 

 

$

104,196

 

 

Uncertain Tax Positions. A summary of the Company’s uncertain tax positions is as follows (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

Balance as of January 1

 

$

3,477

 

 

$

2,553

 

Additions based on tax positions related to the current year

 

 

680

 

 

 

620

 

Additions for tax positions of prior years

 

 

408

 

 

 

304

 

Reductions for tax positions of prior years

 

 

(264

)

 

 

—

 

Balance as of December 31

 

$

4,301

 

 

$

3,477

 

 

The Company believes it is reasonably possible that within the next twelve months the amount of the Company's uncertain tax positions may be decreased by an immaterial amount. The Company has recorded its best estimate of the potential exposure for these issues. As of December 31, 2024 and 2023, the Company had $4.3 million and $2.4 million, respectively, of uncertain tax positions that, if recognized, would affect the annual tax rate.

The Company files a consolidated U.S. federal income tax return, as well as income tax returns in various state and local jurisdictions. The Company's tax returns are routinely audited by federal and state tax authorities and these tax audits are at various stages of completion at any given time. The Company’s tax returns open to examination by a federal or state taxing authority are for years beginning on or after January 1, 2018.