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INCOME TAXES | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The components of the provision (benefit) for income taxes attributable to continuing operations for the years ended December 31, 2024 and 2023, are as follows (in thousands):
| 2024 |  | 2023
Current |  |  |
Federal | $ | 9 |  |  | $ | (57) |
State | 40 |  |  | (59) |
Total current | $ | 49 |  |  | $ | (116) |
Deferred |  |  |
Federal | $ | 532 |  |  | $ | 184 |
State | 352 |  |  | 41 |
Total deferred | $ | 884 |  |  | $ | 225 |
Total tax provision | $ | 933 |  |  | $ | 109 |
Our provision for income taxes attributable to continuing operations for the years ended December 31, 2024 and 2023, differ from the expected tax expense (benefit) amount computed by applying the statutory federal income tax rate of 21% to income before income taxes as a result of the following:
| 2024 |  | 2023
Computed at statutory rate | $ | (2,276) |  |  | $ | (1,912) |
State tax, net of federal benefit | (377) |  |  | (686) |
Permanent items and other | 76 |  |  | 7 |
Officer’s compensation limitation | 345 |  |  | 56 |
Stock compensation | 109 |  |  | (428) |
Credit carryforwards | 759 |  |  | (800) |
Change in tax carryforwards not benefited | — |  |  | 591 |
Change in valuation allowance | 2,297 |  |  | 3,281 |
| $ | 933 |  |  | $ | 109 |
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred taxes for the years ended December 31, 2024 and 2023, are as follows (in thousands):
| 2024 |  | 2023
Deferred tax assets |  |  |
Net operating losses | $ | 10,914 |  |  | $ | 11,643 |
Research and development credit carryforwards | 3,500 |  |  | 4,255 |
Stock compensation | 2,135 |  |  | 1,681 |
Fixed assets | 24 |  |  | — |
Capitalized Software | 3,254 |  |  | 2,012 |
Acquired intangibles | 2,722 |  |  | 857 |
Lease liabilities | 1,314 |  |  | 1,581 |
Accrued expenses | 2,244 |  |  | 1,387 |
Deferred revenue | 326 |  |  | 1 |
Other | 34 |  |  | 3 |
Gross deferred tax assets | 26,467 |  |  | 23,420 |
Less: Valuation allowance | (18,497) |  |  | (16,109) |
Total deferred tax assets | $ | 7,970 |  |  | $ | 7,311 |
Deferred tax liabilities |  |  |
Deferred commissions | $ | (3,236) |  |  | $ | (2,660) |
Fixed assets | — |  |  | (167) |
Goodwill | (6,287) |  |  | (4,924) |
Right-of-use assets | (1,059) |  |  | (1,288) |
Total deferred tax liabilities | $ | (10,582) |  |  | $ | (9,039) |
Net deferred tax liabilities | $ | (2,612) |  |  | $ | (1,728) |
At December 31, 2024, we had federal net operating loss carryforwards of $46,576 and research and development credit carryforwards of $3,570. We also had state net operating loss carryforwards of $20,565 and state tax credit carryforwards of $601. The net operating lo ss and research and development credit carryforwards will expire in varying amounts from 2025 through 2044, if not utilized. Approximately $19,024 of the federal net operating loss carryforwards carry forward indefinitely, but can only offset up to 80% of taxable income. As a result of various acquisitions by us in prior years, we may be subject to a substantial annual limitation in the utilization of the net operating losses and credit carryforwards due to the “change in ownership” provisions of Section 382 of the Internal Revenue Code of 1986. The annual limitation may result in the expiration of net operating losses before utilization. However, based on our analysis, we do not expect any material net operating losses to expire prior to utilization. Due to the uncertainty surrounding the timing of realizing the benefits of our favorable tax attributes in future tax returns, we have placed a valuation allowance against our net deferred tax assets, exclusive of jurisdictions in which we have net deferred tax liabiliti es. During the year ended December 31, 2024, the valuation allowance increased by $2,388 due primarily to operations. Under ASC 740-10, Income Taxes, we periodically review the uncertainties and judgments related to the application of complex income tax regulations to determine income tax liabilities in several jurisdictions. We use a “more likely than not” criterion for recognizing an asset for unrecognized income tax benefits or a liability for uncertain tax positions. We have determined it has the following unrecognized assets or liabilities related to uncertain tax positions as of December 31, 2024. We do not anticipate any significant changes in such uncertainties and judgments during the next twelve months. To the extent we are required to recognize interest and penalties related to unrecognized tax liabilities, this amount will be recorded as an accrued liability. The reconciliation of our unrecognized tax benefits is as follows:
Balance at December 31, 2022 | $ | 566 |
Additions based on tax positions related to the current year | 45 |
Additions for tax positions of prior years | 64 |
Reductions for tax positions of prior years | (26) |
Balance at December 31, 2023 | 649 |
Additions based on tax positions related to the current year | — |
Additions for tax positions of prior years | — |
Reductions for tax positions of prior years | (97) |
Balance at December 31, 2024 | $ | 552 |
As of December 31, 2024, we had $552 of unrecognized tax benefits, of which $20 would affect the effective tax rate if recognized. Our practice is to recognize interest and/or penalties related to income tax matters in inco me tax expense. During the twelve months ended December 31, 2024, we recognized $5 of interest and penalties in our income tax expense. We file tax returns in the U.S. federal jurisdiction and in several state jurisdictions. We are subject to U.S. federal income tax e xaminations for years ending on or after December 31, 2021 and are subject to state and local income tax examinations by tax authorities for years ending on or after December 31, 2020. We are not currently under audit for any federal or state jurisdictions. However, since we have net operating losses, the taxing authorities have the ability to review tax returns no longer subject to examination and make adjustments to these net operating loss carryforwards.

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