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INCOME TAXES | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
INCOME TAXES | 19. INCOME TAXES For financial reporting purposes, income (loss) from continuing operations before income taxes includes the following components (in thousands):
| Years ended December 31,
| 2022 |  | 2021 |  | 2020
United States income (loss) | $ | (35,272) |  |  | $ | 121,180 |  |  | $ | 95,115 |
Foreign income | 1,420 |  |  | 1,836 |  |  | 1,375 |
Total income (loss) from continuing operations before income taxes | $ | (33,852) |  |  | $ | 123,016 |  |  | $ | 96,490 |
The provision (benefit) for income taxes for 2022, 2021 and 2020 consists of the following (in thousands):
| Years ended December 31,
| 2022 |  | 2021 |  | 2020
Current: |  |  |  |  |
Federal | $ | 802 |  |  | $ | 532 |  |  | $ | — |
State | 1,874 |  |  | 4,344 |  |  | 1,316 |
Foreign | 112 |  |  | 183 |  |  | 68 |
Total current | 2,788 |  |  | 5,059 |  |  | 1,384 |
Deferred: |  |  |  |  |
Federal | (1,275) |  |  | (49,045) |  |  | — |
State | (50) |  |  | (4,763) |  |  | — |
Foreign | (79) |  |  | (26) |  |  | (21) |
Total deferred | (1,404) |  |  | (53,834) |  |  | (21) |
Total provision (benefit) for income taxes | $ | 1,384 |  |  | $ | (48,775) |  |  | $ | 1,363 |
The provision (benefit) for income taxes for 2022, 2021 and 2020 differ from the amounts computed by applying the U.S. federal income tax rate of 21% to income (loss) before income taxes for the following reasons (in thousands):
| Year ended December 31,
| 2022 |  | 2021 |  | 2020
U.S. federal income tax provision (benefit) at statutory rate | $ | (7,109) |  |  | $ | 25,833 |  |  | $ | 20,263 |
State income tax expense, net of federal benefit | (1,170) |  |  | 5,734 |  |  | 3,224 |
Global intangible low-tax income | 919 |  |  | 143 |  |  | 229 |
Non-deductible executive compensation | 905 |  |  | 1,908 |  |  | 147 |
Stock based compensation expense | 219 |  |  | (3,851) |  |  | 1,839 |
Other, net | (67) |  |  | (33) |  |  | (34) |
Delaware gift card litigation reversal | — |  |  | — |  |  | (1,022) |
Research and development credit | (2,956) |  |  | (1,419) |  |  | (1,266) |
Change in valuation allowance | 10,643 |  |  | (77,090) |  |  | (22,017) |
Total provision (benefit) for income taxes | $ | 1,384 |  |  | $ | (48,775) |  |  | $ | 1,363 |
The components of our deferred tax assets and liabilities as of December 31, 2022 and 2021 are as follows (in thousands):
| December 31,
| 2022 |  | 2021
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 20,711 |  |  | $ | 35,247 |
Research and development tax credits | 20,549 |  |  | 19,551 |
Basis difference in equity securities | 15,302 |  |  | 6,092 |
Capitalized software development | 12,604 |  |  | — |
Unearned revenue | 5,694 |  |  | 5,431 |
Accrued expenses | 4,259 |  |  | 5,750 |
Reserves and other | 2,592 |  |  | 2,835 |
Operating lease liabilities | 1,844 |  |  | 3,128 |
Other tax credits and carryforwards | 288 |  |  | 207 |
Intangible assets | 208 |  |  | 135 |
Gross deferred tax assets | 84,051 |  |  | 78,376 |
Valuation allowance | (21,459) |  |  | (11,384) |
Total deferred tax assets | 62,592 |  |  | 66,992 |
Deferred tax liabilities: |  |  |
Basis difference in equity securities | (15,072) |  |  | (20,831) |
Operating lease right-of-use assets | (1,702) |  |  | (3,077) |
Fixed assets | (3,730) |  |  | (2,264) |
Prepaid expenses | (649) |  |  | (785) |
Total deferred tax liabilities | (21,153) |  |  | (26,957) |
Total deferred tax assets (liabilities), net | $ | 41,439 |  |  | $ | 40,035 |
For tax years beginning on or after January 1, 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development expenditures, including software development, as defined under IRC Section 174, in the year incurred. Instead, taxpayers are required to amortize such expenditures over five years if incurred in the U.S. and over fifteen years if incurred in a foreign jurisdiction. This new requirement caused us to utilize significant federal and state tax net operating loss carryforwards in the current year. We will continue to utilize federal and state tax attributes at a faster rate than our financial statement earnings in the future and there may be increases to cash taxes paid unless legislation is passed that would defer, repeal, or otherwise modify these new requirements. This change also impacted certain other computations within our tax provision, such as our global intangible low-tax income and our research and development credit, increasing both items over prior years. At December 31, 2022, we have federal net operating loss carryforwards with no expiration date of approximately $73.6 million; the utilization of these net operating loss carryforwards is limited to 80% of taxable income in any given year. We have state net operating loss carryforwards with no expiration date of approximately $37.4 million primarily in the state of Utah; the utilization of these net operating loss carryforwards is limited to 80% of taxable income in the state in any given year. We also have state net operating loss carryforwards of approximately $68.9 million that expire between 2026 and 2039. At December 31, 2022, we have federal research credit carryforwards of approximately $23.2 million that expire between 2032 and 2042. We also have state research credit carryforwards of approximately $9.8 million that expire between 2023 and 2036. Ownership changes under Internal Revenue Code Section 382 could limit the amount of net operating losses or credit carryforwards that can be used in the future. Each quarter we assess the recoverability of our deferred tax assets under ASC Topic 740. We assess available positive and negative evidence to estimate whether we will generate sufficient future taxable income to use our existing deferred tax assets. We have no carryback ability, and therefore we must rely on future taxable income, including tax planning strategies and future reversals of taxable temporary differences, to support their realizability. We maintain a valuation allowance against our deferred tax assets for capital losses and the state of Utah where not supported by future reversals of taxable temporary differences, because of the uncertainty regarding the realizability of these deferred tax assets. We will continue to monitor the need for a valuation allowance against our remaining deferred tax assets on a quarterly basis. A reconciliation of the beginning and ending unrecognized tax benefits, excluding interest and penalties, as of December 31, 2022, 2021 and 2020 is as follows (in thousands):
| Year ended December 31,
| 2022 |  | 2021 |  | 2020
Beginning balance | $ | 11,961 |  |  | $ | 9,638 |  |  | $ | 9,058 |
Additions for tax positions related to the current year | 1,083 |  |  | 1,992 |  |  | 971 |
Additions (reductions) for tax positions taken in prior years | 444 |  |  | 331 |  |  | (35) |
Reduction due to settlements | — |  |  | — |  |  | (301) |
Reduction due to cash payments | — |  |  | — |  |  | (55) |
Ending balance | $ | 13,488 |  |  | $ | 11,961 |  |  | $ | 9,638 |
Included in the balance of unrecognized tax benefits as of December 31, 2022, 2021 and 2020, are approximately $13.5 million, $12.0 million, and $9.6 million, respectively, of tax benefits that, if recognized, would affect the effective tax rate. We believe it is reasonably possible that these unrecognized tax benefits will continue to increase in the future. Accrued interest and penalties on unrecognized tax benefits as of December 31, 2022 and 2021 were $1.1 million and $753,000, respectively. We are subject to taxation in the United States and various state and foreign jurisdictions. Tax years beginning in 2018 are subject to examination by taxing authorities, although net operating loss and credit carryforwards from all years are subject to examinations and adjustments for at least three years following the year in which the attributes are used. We have indefinitely reinvested foreign earnings of $7.1 million at December 31, 2022. We would need to accrue and pay various taxes on this amount if repatriated. We do not intend to repatriate these earnings.

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