XML 51 R33.htm IDEA: XBRL DOCUMENT v3.24.0.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES
24. INCOME TAXES
    
For financial reporting purposes, income (loss) from continuing operations before income taxes includes the following components (in thousands):
 Years ended December 31,
 202320222021
United States income (loss)$(267,058)$(35,272)$121,180 
Foreign income936 1,420 1,836 
Total income (loss) from continuing operations before income taxes$(266,122)$(33,852)$123,016 

The provision (benefit) for income taxes for 2023, 2022 and 2021 consists of the following (in thousands):
 Years ended December 31,
 202320222021
Current:   
Federal$(55)$802 $532 
State369 1,874 4,344 
Foreign58 112 183 
Total current372 2,788 5,059 
Deferred:   
Federal37,160 (1,275)(49,045)
State4,201 (50)(4,763)
Foreign(13)(79)(26)
Total deferred41,348 (1,404)(53,834)
Total provision (benefit) for income taxes$41,720 $1,384 $(48,775)
The provision (benefit) for income taxes for 2023, 2022 and 2021 differ from the amounts computed by applying the U.S. federal income tax rate of 21% to income (loss) before income taxes for the following reasons (in thousands):
 Year ended December 31,
 202320222021
U.S. federal income tax provision (benefit) at statutory rate$(55,886)$(7,109)$25,833 
State income tax expense, net of federal benefit(12,297)(1,170)5,734 
Research and development credit(3,245)(2,956)(1,419)
Global intangible low-tax income(736)919 143 
Other, net(1)(67)(33)
Non-deductible executive compensation762 905 1,908 
Stock-based compensation expense 2,477 219 (3,851)
Change in valuation allowance110,646 10,643 (77,090)
Total provision (benefit) for income taxes $41,720 $1,384 $(48,775)

The components of our deferred tax assets and liabilities as of December 31, 2023 and 2022 are as follows (in thousands):
 December 31,
 20232022
Deferred tax assets:  
Basis difference in equity securities$34,729 $15,302 
Net operating loss carryforwards29,440 20,711 
Capitalized software development25,840 12,604 
Research and development tax credits24,202 20,549 
Unearned revenue7,925 5,694 
Property and equipment, net held for sale6,484 255 
Accrued expenses4,275 4,259 
Reserves and other2,551 2,592 
Operating lease liabilities861 1,844 
Other tax credits and carryforwards270 288 
Intangible assets117 208 
Gross deferred tax assets136,694 84,306 
Valuation allowance(132,105)(21,459)
Total deferred tax assets4,589 62,847 
Deferred tax liabilities:
Basis difference in equity securities— (15,072)
Property and equipment, net(3,125)(3,985)
Operating lease right-of-use assets(786)(1,702)
Prepaid expenses(587)(649)
Total deferred tax liabilities(4,498)(21,408)
Total deferred tax assets, net$91 $41,439 

At December 31, 2023, our net deferred tax asset of $91,000 is made up of $152,000 of foreign deferred tax assets and offset by $61,000 of U.S. deferred tax liabilities which are included in Other long-term liabilities on our consolidated balance sheets.
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 requirement caused us to generate fewer federal and state tax net operating loss carryforwards in the current year than our operating loss would have normally generated. We may utilize federal and state tax net operating loss carryforwards 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 requirements. This change also impacted certain other computations within our tax provision, such as increasing our research and development credit generated each year.

At December 31, 2023, we have federal net operating loss carryforwards with no expiration date of approximately $107.4 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 $73.8 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 $63.6 million that expire between 2028 and 2043.

At December 31, 2023, we have federal research credit carryforwards of approximately $28.0 million that expire between 2031 and 2043. We also have state research credit carryforwards of approximately $10.3 million that expire between 2024 and 2037. 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 on a jurisdictional basis whether it is more likely than not that our deferred tax assets will be realized under ASC Topic 740. 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 recover our deferred tax assets. We assess available positive and negative evidence to estimate whether we will generate sufficient future taxable income to use our existing deferred tax assets. A significant piece of objective negative evidence evaluated as of December 31, 2023, is the expectation to be in a cumulative loss position over a three-year period, in the near future. This expectation stems from recent changes in management and operational focus; the Company will be focused on driving growth in active customers and launching new products and services. While these changes are projected to increase both revenues and profits in the long-term, in the short-term we are projecting losses as we invest in these endeavors. These short-term losses, coupled with our recent operating results, indicate we will be in a cumulative loss position over a three-year period, in the near future. A cumulative loss, including the expectation to be in a cumulative loss position in the near-term because of forecasting near-term losses, is significant negative evidence that is difficult to overcome. Such objective negative evidence limits our ability to consider other more subjective evidence such as our projections for future growth. On the basis of this evaluation, as of December 31, 2023, a valuation allowance has been recorded against our deferred tax assets for the U.S. jurisdiction, not supported by reversals of taxable temporary differences. We previously maintained 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. For the year ended December 31, 2023, the total increase in the valuation allowance was $110.6 million. We intend to continue maintaining a valuation allowance on our net U.S. deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. The amount of the deferred tax asset considered realizable could be adjusted if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth. We will continue to monitor the need for a valuation allowance against our 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, 2023, 2022 and 2021 is as follows (in thousands):
 Year ended December 31,
 202320222021
Beginning balance$13,488 $11,961 $9,638 
Additions for tax positions related to the current year1,258 1,083 1,992 
Additions for tax positions taken in prior years274 444 331 
Ending balance$15,020 $13,488 $11,961 
Included in the balance of unrecognized tax benefits as of December 31, 2023, 2022 and 2021, are approximately $15.0 million, $13.5 million, and $12.0 million, respectively, of tax benefits that, if recognized, and the valuation allowance against our net deferred tax assets were released, 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, 2023 and 2022 were $1.3 million and $1.1 million, respectively.

We are subject to taxation in the United States and various state and foreign jurisdictions. Tax years beginning in 2019 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.

As we repatriate foreign earnings for use in the United States, the distributions will generally be exempt from federal and foreign income taxes but may be subject to certain state taxes. As of December 31, 2023, the cumulative amount of foreign earnings considered permanently reinvested upon which taxes have not been provided, and the corresponding unrecognized deferred tax liability, was not material.