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Income Taxes

12 Months Ended

Dec. 31, 2023

Income Taxes

Income Taxes

Note 15.  Income Taxes

The (benefit) provision for income tax expense consisted of the following:

​

​	​	​	​	​	​	​	​	​	​
​	​	Year Ended December 31,
(In thousands)		2023			2022			2021
Current income taxes, Federal	​	$	5,045	​	$	1,838	​	$	(1,274)
Current income taxes, State	​	​	1,440	​	​	637	​	​	214
​	​	​	6,485	​	​	2,475	​	​	(1,060)
​	​	​	​	​	​	​	​	​	​
Deferred income taxes, Federal	​		(19,046)	​		(32)	​		7,874
Deferred income taxes, State	​	​	(332)	​	​	—	​	​	2,356
​	​	​	(19,378)	​	​	(32)	​	​	10,230
​	​	​	​	​	​	​	​	​	​
Unrecognized tax benefit, Federal	​		148	​		(50)	​		348
Unrecognized tax benefit, State	​	​	—	​	​	—	​	​	—
​	​	​	148	​	​	(50)	​	​	348
​	​	​	​	​	​	​	​	​	​
Total (benefit) provision for income taxes	​	$	(12,745)	​	$	2,393	​	$	9,518

​

The components of our deferred tax assets and liabilities were as follows:

​

​	​	​	​	​	​	​
​	​	At December 31,
(In thousands)		2023			2022
Deferred tax assets:	​	​	​	​	​	​
Operating lease liability	​	$	5,394	​	$	5,945
Net operating loss carryforwards	​	​	50	​	​	179
Accounts receivable and inventory reserves	​	​	7,065	​	​	6,013
Stock-based compensation	​	​	5,144	​	​	4,886
Accrued liabilities	​		2,056	​		1,914
Warranty reserves	​	​	1,025	​	​	1,071
Intangible assets	​	​	1,645	​	​	2,947
Business credits	​	​	630	​	​	536
R&D expenses	​	​	2,189	​	​	1,103
Other	​		309	​		183
Total deferred tax assets	​	​	25,507	​	​	24,777
​	​	​	​	​	​	​
Deferred tax liabilities:	​	​	​	​	​	​
Right-of-use asset	​		(4,799)	​		(5,425)
Fixed assets	​	​	(975)	​	​	(1,080)
Prepaid expenses	​	​	(232)	​	​	(251)
Other	​	​	(123)	​	​	(186)
Total deferred tax liabilities	​	​	(6,129)	​	​	(6,942)
​	​	​	​	​	​	​
Valuation allowance	​	​	—	​	​	(17,835)
​	​	​	​	​	​	​
Net deferred tax assets	​	$	19,378	​	$	—

​

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

​

​	​	​	​	​	​	​	​	​	​
​	​	Year Ended December 31,
​		2023		​	2022		​	2021
Tax expense at statutory rate		21.0	%	​	21.0	%	​	21.0	%
State income taxes, net of federal benefit	​	5.2	​	​	4.1	​	​	(1.1)	​
Executive compensation	​	0.9	​	​	—	​	​	(14.2)	​
Meals and entertainment	​	2.1	​	​	—	​	​	—	​
Employee Stock Purchase Plan	​	0.9	​	​	(1.0)	​	​	(7.5)	​
Federal business credits	​	(1.5)	​	​	1.6	​	​	10.9	​
Valuation allowance	​	(113.3)	​	​	(37.4)	​	​	(525.0)	​
Return to provision	​	0.5	​	​	(0.2)	​	​	(6.5)	​
Research and development credits	​	—	​	​	—	​	​	60.2	​
Deferred reprice - state		0.2		​	0.9		​	3.3	​
Unrecognized tax benefits	​	0.3	​	​	(0.3)	​	​	(2.2)	​
Excess benefit on non-qualified stock options and RSUs	​	2.3	​	​	(3.7)	​	​	47.2	​
Interest and penalties	​	0.1	​	​	—	​	​	(0.7)	​
162(m) write down	​	1.6	​	​	—	​	​	—	​
Other		(1.1)		​	(0.5)		​	(0.5)	​
Net effective rate		(80.8)	%	​	(15.5)	%	​	(415.1)	%

​

​

A reconciliation of unrecognized tax benefits (“UTB”) is as follows:

​

​	​	​	​	​	​	​	​	​	​
​	​	December 31,
(In thousands)		2023			2022			2021
Balance beginning of the year	​	$	612	​	$	522	​	$	—
Gross change — tax positions in prior year	​	​	90	​	​	90	​	​	522
Balance end of the year	​	$	702	​	$	612	​	$	522

​

Deferred income taxes result from temporary differences between the reporting of amounts for financial statement purposes and income tax purposes. These differences relate primarily to different methods used for income tax purposes including depreciation and amortization, warranty and vacation accruals, and deductions related to allowances for doubtful accounts receivable, and inventory reserves.

As of December 31, 2023, the Company had approximately $50 thousand of state net operating loss ("NOL") carryforwards. A portion of the state NOL carry forward amounts have begun to expire in the current year. The state NOL carryforward amounts expire beginning in tax years 2027 if not utilized.

The Company is subject to income tax examinations in the U.S. federal jurisdiction as well as in various state jurisdictions. U.S. federal and state tax years prior to 2019 are closed to examination. In the event of any future tax assessments, we have elected to record the income taxes and any related interest and penalties as income tax expense on our Consolidated Statement of Operations. The Company is not under exam in any jurisdictions.

We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority.

Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. As of December 31, 2023, in part because in the current year we achieved three years of cumulative pretax income in the U.S. federal tax jurisdiction, management determined that there was sufficient positive evidence to conclude that it is more likely than not that additional deferred taxes of $19.4 million are realizable. We therefore reduced the valuation allowance related to the future realization of deferred tax assets accordingly.  

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The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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