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Note 15 - Income Tax Benefit
 12 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

15.

Income tax benefit

 

The following table summarizes the income tax provision (benefit) for the years ended:

 

  

2023

  

2022

  

2021

 

Income before taxes - U.S.

 $37,383  $13,738  $15,930 

Income tax provision (benefit):

            

Federal

            

Current

  -   290   142 

Deferred

  -   (1,998)  (10,417)

State and other

            

Current

  1   60   (13)

Deferred

  -   175   (37)

Total

 $1  $(1,473) $(10,325)

 

Differences between the income tax provision (benefit) computed using the U.S. federal statutory income tax rate were as follows:

 

  

2023

  

2022

  

2021

 

Amount computed using the statutory rate of 21% for 2023, 2022, and 2021

  21.0%  21.0%  21.0%

Agri-biodiesel production credit

  (3.2)  (8.6)  (7.4)

Federal BTC benefit

  (32.3)  (76.2)  (75.2)

State BTC benefit

  (4.4)  (7.0)  (8.9)

Credit for increasing research activities

  (0.5)  (1.0)  (0.7)

Dividends received deduction

  (0.1)  (1.6)  (1.6)

State income taxes, net

  2.3   5.1   3.5 

State rate change and other deferred adjustments

  (1.0)  3.6   5.0 

Valuation allowance for deferred tax assets

  18.2   53.8   - 

CARES Act

  -   -   - 

Other

  -   0.2   (0.5)

Income tax benefit

  0.0%  (10.7)%  (64.8)%

 

The income tax provision in 2023 was $1 or an effective tax rate of 0.0% as compared to an income tax benefit of $1,473 or an effective tax rate of 10.7% in 2022 and an income tax benefit of $10,325 or an effective tax rate of 64.8% in 2021.

 

The Company’s effective tax rates for the years 2023, 2022, and 2021 reflect the positive effect of the BTC and Small Agri-biodiesel Producer Tax Credit. Based on technical guidance from the Internal Revenue Service, the Company excludes the portion of the BTC not used to satisfy excise tax liabilities from income. Both incentives are currently due to expire in December 2024.

 

The Company’s 2022 and 2021 effective tax rate provisions reflect the negative impact to the Company’s overall state income tax position of its 2021 decision to phase out its shipments on the petroleum products common carrier pipelines and the termination of these operations in 2022. This operational change shifts the Company’s business among various states such that its net deferred tax liabilities will be realized at higher rates. Additionally, the Company’s 2023 and 2021 state deferred tax provision reflects a one-time benefit from state legislation enacted during the year which applies a lower tax rate to future reversals of deferred tax liabilities.

 

In 2023 and 2022, the Company determined that its deferred tax assets are realizable only to the extent of its deferred tax liabilities and recorded a valuation allowance that reduces its net deferred tax asset to $0.

 

The significant components of deferred tax assets and liabilities were as follows as of December 31:

 

  

2023

  

2022

 

Deferred tax assets

        

Compensation

 $43  $391 

Inventory reserves

  618   601 

Self-insurance

  65   70 

Asset retirement obligation

  316   323 

Deferred revenue

  3,693   4,081 

Federal net operating loss carryforwards

  15,240   9,360 

State net operating loss carryforwards

  2,765   1,884 

Accrued expenses

  742   2,648 

Stock based compensation

  24   24 

Federal credit carryforwards

  6,915   5,216 

State credit carryforwards

  676   687 

Research & development costs

  1,451   749 

Derivative instruments

  -   29 

Capital loss carryforwards

  1,898   1,241 

Trading securities

  -   656 

Other

  89   96 

Subtotal deferred tax assets

  34,535   28,056 

Valuation Allowance

  (14,216)  (7,392)

Total deferred tax assets

  20,319   20,664 
         

Deferred tax liabilities

        

Derivative instruments

  (403)  - 

LIFO inventory

  (3,957)  (2,740)

Depreciation

  (14,978)  (17,046)

Prepaid expenses

  (981)  (878)

Total deferred tax liabilities

  (20,319)  (20,664)

Net deferred tax liabilities

 $-  $- 

 

The Company’s federal net operating loss carryforwards at December 31, 2023 do not expire and can be carried forward indefinitely. Utilization of these carryforwards is limited to 80% of taxable income in any given year. State net operating loss carryforwards at December 31, 2023 reflect losses generated in 2019 through 2023 and, if unused, will expire in years 2024 through 2033. Federal and state tax losses are primarily a function of the nontaxable nature of the BTC.

 

Federal tax credit carryforwards at December 31, 2023 include the Small Agri-biodiesel Producer Credit and Credit for Increasing Research generated in years 2019 through 2023 and expiring in 2039 through 2043. State credit carryforwards comprise Arkansas In-house Research Credits generated in 2019 through 2020 and expiring in 2028 through 2029.

 

Capital loss carryforwards were generated in 2019 through 2023 and will expire in 2024 through 2028. 

 

A tax valuation allowance is recognized if it is more likely than not that some portion or all of the deferred tax assets will not be realized. In assessing the recoverability of its deferred tax assets, the Company evaluates available positive and negative evidence to estimate whether it is more likely than not that sufficient future taxable income will be generated to permit use of the existing deferred tax assets in each taxing jurisdiction. In making this determination, the Company considers positive evidence in the form of projections of future taxable income, reversing temporary differences, and tax planning strategies. In years in which the Company has experienced objective negative evidence in the form of three cumulative years of tax losses, the Company no longer uses taxable income projections to overcome the presumption of losses and deferred tax asset valuations are computed taking into account tax planning strategies and the reversing net deferred tax liability from temporary differences as sources of income.

 

As of December 31, 2023 and 2022, the Company recorded valuation allowances of $14,216 and $7,392, respectively, after determining that its total deferred tax assets are more likely than not realizable only to the extent of its deferred tax liabilities.

 

There are no unrecognized tax positions as of December 31, 2023, 2022, or 2021, and the Company does not anticipate any change over the next twelve months.

 

The Company records interest expense (income) and penalties, net, as a component of income tax (benefit) provision and had accrued interest and penalties of $0, ($95), and ($60) for December 31, 2023, 2022 and 2021, respectively. Liabilities for accrued interest and tax penalties on unrecognized tax benefits were $0 at both December 31, 2023 and 2022, respectively.

 

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and with various state jurisdictions. In general, the Company is subject to U.S., state, and local examinations by tax authorities from 2020 forward.