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Note 8 - Income Taxes
 12 Months Ended
Dec. 31, 2022
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

NOTE 8 – INCOME TAXES

 

Deferred taxes are recorded based upon differences between the financial statement and tax basis of assets and liabilities and available carryforwards. Temporary differences and carryforwards which gave rise to a significant portion of deferred tax assets and liabilities as of December 31, 2022 and 2021 are as follows (dollars in thousands):

 

  

December 31,

 
  

2022

  

2021

 
         

Deferred tax assets:

        

Net operating losses

 $69,537  $64,418 

Fixed asset basis difference

  4,599   4,566 

Contributions carryover

  48   38 

Deferred compensation

  695   497 

Accrued liabilities and other

  358   333 
         

Total deferred tax assets

  75,237   69,852 
         

Valuation allowance for deferred tax assets

  (75,237

)

  (69,852

)

         

Net deferred tax asset

 $-  $- 

 

The change in deferred tax assets resulted from current year net operating losses and changes to future tax deductions resulting from expiring net operating losses, terms of stock compensation plans, fixed assets, and accrued liabilities.  A full valuation allowance continues to be recorded given the Company continues to be incurring losses.

 

Cadiz Inc.

Notes To The Consolidated Financial Statements

 

As of December 31, 2022, the Company had net operating loss (NOL) carryforwards of approximately $330 million for federal income tax purposes and $283 million for California income tax purposes. Such carryforwards expire in varying amounts through the year 2037 and 2042 for federal and California purposes, respectively. For federal losses arising in tax years ending after December 31, 2017, the NOL carryforwards are allowed indefinitely. Use of the carryforward amounts is subject to an annual limitation as a result of a previous ownership change and a tax ownership change that occurred in June of 2021.

 

As of December 31, 2022 and 2021, the Company's unrecognized tax benefits were immaterial.

 

The Company's tax years 2019 through 2022 remain subject to examination by the Internal Revenue Service, and tax years 2018 through 2022 remain subject to examination by California tax jurisdictions. In addition, the Company's loss carryforward amounts are generally subject to examination and adjustment for a period of three years for federal tax purposes and four years for California purposes, beginning when such carryovers are utilized to reduce taxes in a future tax year.

 

A reconciliation of the income tax benefit to the statutory federal income tax rate is as follows (dollars in thousands):

 

  

2022

  

2021

 
         

Expected federal income tax benefit at 21%

 $(5,205

)

 $(6,560

)

Increase (decrease) in valuation allowance

  3,906   (8,530

)

State income tax

  7   10 

Expiring carryforwards

  577   14,260 

Non-deductible expenses and other

  722   830 
         

Income tax expense

 $7  $10 

 

Because it is more likely than not that the Company will not realize its net deferred tax assets, it has recorded a full valuation allowance against these assets. Accordingly, no deferred tax asset has been recorded in the accompanying balance sheet.