XML 40 R25.htm IDEA: XBRL DOCUMENT
v3.25.1

Note 15 - Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2024
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | NOTE 15 INCOME TAXES The Company and all of its eligible U.S. subsidiaries file a U.S. consolidated federal income tax return ("KFSI Tax Group"). The method of allocating federal income taxes among the companies in the KFSI Tax Group is subject to written agreement, approved by each company's Board of Directors. The allocation is made primarily on a separate return basis, with current credit for any net operating losses or other items utilized in the consolidated federal income tax return. The Company’s non-U.S. subsidiaries file separate foreign income tax returns. Income tax benefit consists of the following:
(in thousands) |  | Years ended December 31, |
|  | 2024 |  |  | 2023 |
Current income tax expense |  | $ | 390 |  |  | $ | 25 |
Deferred income tax benefit |  |  | (537 | ) |  |  | (1,924 | )
Income tax benefit |  | $ | (147 | ) |  | $ | (1,899 | )
Income tax benefit varies from the amount that would result by applying the applicable U.S. corporate income tax rate of 21% to (loss) income from continuing operations before income tax benefit. The following table summarizes the differences:
(in thousands) |  | Years ended December 31, |
|  | 2024 |  |  | 2023 |
Income tax (benefit) expense at U.S. statutory income tax rate |  | $ | (1,735 | ) |  | $ | 4,967 |
Valuation allowance |  |  | 1,591 |  |  |  | (7,678 | )
Indefinite life intangibles |  |  | (243 | ) |  |  | 258 |
Non-deductible compensation |  |  | 143 |  |  |  | 435 |
Investment income |  |  | (166 | ) |  |  | (18 | )
State income tax, net of Federal benefit |  |  | 161 |  |  |  | (2 | )
Disposition of subsidiary |  |  | — |  |  |  | (18 | )
Other |  |  | 102 |  |  |  | 157 |
Income tax benefit for continuing operations |  | $ | (147 | ) |  | $ | (1,899 | )
The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and liabilities are presented as follows:
(in thousands) |  | December 31, |
|  | 2024 |  |  | 2023 |
Deferred income tax assets: |  |  |  |  |  |  |  |
Losses carried forward |  | $ | 132,150 |  |  | $ | 132,302 |
Unpaid loss and loss adjustment expenses and unearned premiums |  |  | 3,790 |  |  |  | 3,795 |
Intangible assets |  |  | 860 |  |  |  | 1,109 |
Debt issuance costs |  |  | 78 |  |  |  | 85 |
Investments |  |  | 109 |  |  |  | — |
Deferred rent |  |  | 61 |  |  |  | 65 |
Deferred revenue |  |  | 247 |  |  |  | 253 |
Compensation |  |  | 219 |  |  |  | 173 |
Other |  |  | 326 |  |  |  | 608 |
Valuation allowance |  |  | (130,707 | ) |  |  | (129,375 | )
Deferred income tax assets |  | $ | 7,133 |  |  | $ | 9,015 |
Deferred income tax liabilities: |  |  |  |  |  |  |  |
Indefinite life intangibles |  | $ | (3,899 | ) |  | $ | (4,152 | )
Depreciation and amortization |  |  | (140 | ) |  |  | (1,180 | )
Fair value of debt |  |  | (334 | ) |  |  | — |
Land |  |  | — |  |  |  | (47 | )
Intangible assets |  |  | (1,892 | ) |  |  | (3,175 | )
Deferred revenue |  |  | (1,605 | ) |  |  | (1,499 | )
Investments |  |  | — |  |  |  | (168 | )
Deferred acquisition costs |  |  | (2,913 | ) |  |  | (2,884 | )
Other |  |  | (721 | ) |  |  | (951 | )
Deferred income tax liabilities |  | $ | (11,504 | ) |  | $ | (14,056 | )
Net deferred income tax liabilities |  | $ | (4,371 | ) |  | $ | (5,041 | )
The Company maintains a valuation allowance for its gross deferred income tax assets of $130.7 million (U.S. operations - $130.7 million; Other - less than $0.1 million) and $129.4 million (U.S. operations - $129.4 million; Other - less than $0.1 million) at December 31, 2024 and December 31, 2023, respectively. The Company's businesses 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 December 31, 2024 and December 31, 2023 net deferred income tax assets, excluding the deferred income tax asset and liability amounts set forth in the paragraph below. In 2024, the Company (i) increased by $0.1 million its valuation allowance primarily due to deferred tax liabilities assumed from corporate acquisitions; (ii) decreased by $0.2 million its valuation allowance relating to a change in indefinite life deferred income tax liabilities; and (iii) decreased by $0.2 million its valuation allowance associated with business interest expense with an indefinite life. In2023, the Company (i) decreased by $2.1 million its valuation allowance primarily due to deferred tax liabilities assumed from corporate acquisitions; and (ii) increased by $0.3 million its valuation allowance relating to a change in indefinite life deferred income tax liabilities. The Company carries net deferred income tax liabilities of$4.4 million and $5.0 million at December 31, 2024 and December 31, 2023, respectively, that consists of:
| • | $3.7 million and $4.1 million of deferred income tax liabilities related to indefinite life intangible assets; and
| • | $0.7 million and $0.9 million of deferred state income tax liabilities.
The Tax Cuts and Jobs Act (the "Tax Act") modified the U.S. net operating loss deduction, effective with respect to losses arising in tax years beginning after December 31, 2017. The Tax Act, however, did not limit the utilization, in 2018 and later tax years, of U.S. net operating losses generated in 2017 and prior tax years. Amounts, originating dates and expiration dates of the KFSI Tax Group's consolidated U.S. net operating loss carryforwards, totaling $622.3 million, are as follows:
|  |  |  | Net operating loss |
Year of net operating loss |  | Expiration date |  | (in thousands) |
2009 |  | 2029 |  | $ | 384,582 |
2010 |  | 2030 |  |  | 92,058 |
2011 |  | 2031 |  |  | 39,866 |
2012 |  | 2032 |  |  | 30,884 |
2013 |  | 2033 |  |  | 30,779 |
2014 |  | 2034 |  |  | 7,245 |
2016 |  | 2036 |  |  | 16,006 |
2017 |  | 2037 |  |  | 20,848 |
In addition, not reflected in the table above, are net operating loss carryforwards of (i) $4.0 million relating to losses generated in separate U.S. tax return years, which losses will expire over various years through 2037 and (ii) $0.1 million relating to non-U.S. operations, which losses will expire over various years through 2044. At December 31, 2024 and December 31, 2023, the Company had no unrecognized tax benefits. The Company classifies interest and penalty accruals, if any, related to unrecognized tax benefits as income tax expense (benefit). The federal income tax returns of the Company's U.S. operations for the years through 2020 are closed for Internal Revenue Service ("IRS") examination. The Company's federal income tax returns are not currently under examination by the IRS for any open tax years. The federal income tax returns of the Company's Canadian operations for the years through 2019 are closed for Canada Revenue Agency ("CRA") examination. The Company's Canadian federal income tax returns are not currently under examination by the CRA for any open tax years.

X
- References No definition available. + Details
Name: | us-gaap_DisclosureTextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income tax. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 231 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482663/740-10-55-231 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12C -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12B -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147477891/740-270-50-1 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480990/946-20-50-13 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/740/tableOfContent Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-14 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-21 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-17 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-2 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration