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Note 14 - Income Taxes
 6 Months Ended
Jun. 30, 2023
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

NOTE 14 INCOME TAXES

 

Income tax expense (benefit) for the three and six months ended June 30, 2023 and June 30, 2022 varies from the amount that would result by applying the applicable U.S. federal corporate income tax rate of 21% to (loss) income from continuing operations before income tax expense (benefit). The following table summarizes the differences:

 

(in thousands)

 

Three months ended June 30,

  

Six months ended June 30,

 
  

2023

  

2022

  

2023

  

2022

 

Income tax (benefit) expense at U. S. statutory income tax rate

 $(338) $(666) $5,643  $(1,594)

Valuation allowance

  240   176   (5,664)  469 

Non-deductible compensation

  37   21   66   68 

Investment income

  65   (8)  83   (11)

State income tax

  121   150   610   195 

Indefinite life intangibles

  59   53   139   107 

Contingent consideration

  14   250   14   315 

Other

  15   5   21   10 

Income tax expense (benefit)

 $213  $(19) $912  $(441)

 

The Company maintains a valuation allowance for its gross deferred tax assets at June 30, 2023 and December 31, 2022. The Company's operations have generated substantial operating losses in prior years. These losses can be available to reduce income taxes that might otherwise be incurred on future taxable income; however, it is uncertain whether the Company will generate the taxable income necessary to utilize these losses or other reversing temporary differences. This uncertainty has caused management to place a full valuation allowance on its June 30, 2023 and December 31, 2022 net deferred tax asset, excluding the deferred income tax liability amounts set forth in the paragraph below which were determined to not reverse and offset existing deferred tax assets.  For the three months ended  June 30, 2023 and  June 30, 2022, the Company released into income zero and $0.3 million, respectively (zero and $0.8 million for the six months ended  June 30, 2023 and  June 30, 2022, respectively), of its valuation allowance associated with business interest expense carryforwards with an indefinite life.

 

The Company carries net deferred income tax liabilities of $4.3 million and $4.2 million at June 30, 2023 and December 31, 2022, respectively, that consists of:

 

 

•

$3.9 million and $3.8 million of deferred income tax liabilities related to indefinite lived intangible assets; and

 

•

$0.4 million and $0.4 million of deferred state income tax liabilities.

 

As of June 30, 2023 and December 31, 2022, the Company carried a liability for unrecognized tax benefits of zero. The Company classifies interest and penalty accruals, if any, related to unrecognized tax benefits as income tax expense.  The Company recorded income tax expense of zero and less than $0.1 million related to interest and penalty accruals for the three months ended  June 30, 2023 and  June 30, 2022, respectively (zero and $0.1 million for the six months ended  June 30, 2023 and  June 30, 2022, respectively).