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Note 10 - Income Tax Provision
 3 Months Ended
Mar. 31, 2022
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

10)

INCOME TAX PROVISION

 

The following table summarizes the income tax provision.  

 

  Three Months Ended March 31, 
  2022  2021 

Income tax (benefit) provision

 $(704) $(4,387)

Effective tax rate

  5.4%  33.3%

 

 

 

The Company’s effective tax rate for the three months ended March 31, 2022 was unfavorably impacted by the assessment that the carryforwards of its 2022 net operating loss and tax credits would not more likely than not be realizable in full.  Because the tax benefit of the year to date loss is greater than the anticipated realizable value of tax benefit of the full year loss, the year to date benefit has been limited to the anticipated full year benefit pursuant to ASC 740.

 

Additionally, the net income tax benefit for the three months ended March 31, 2022 was unfavorably impacted by the recognition of tax expense for valuation allowances against various tax attributes existing at January 1, 2022.   The Company evaluates its deferred tax assets quarterly and records a valuation allowance to reduce these assets to the amount that is more likely than not to be realized. During the first quarter of 2022, based on all available evidence, the Company determined that portions of its deferred tax assets for carryforwards of capital losses, state tax credits, and state net operating losses expiring in the next ten years are not more likely than not to be realized.

 

In the three months ended March 31, 2021, because the Company was unable to reliably estimate its annual effective tax rate, the tax benefit was determined by applying an actual year-to-date effective rate to year-to-date pretax income.  The effective tax rate for the three months ended March 31, 2021 reflected the positive effects of certain tax credits and incentives, the most significant of which are the BTC and Small Agri-biodiesel Producer Tax Credit. While the Company remains eligible for these credits in 2022, realizability concerns have limited their impacts on the effective rate.