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INCOME TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES
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.
The components of loss before income taxes were as follows for the fiscal periods indicated (in thousands):
Year-ended
December 31,
202320222021
Domestic$(96,517)$(380,014)$(83,172)
Foreign14,100 (940)(7,106)
Loss before provision for income taxes
$(82,417)$(380,954)$(90,278)
Provision for income taxes consisted of the following components for the fiscal periods indicated (in thousands):
 Year-ended
December 31,
 202320222021
Current:
Federal$12 $241 $124 
State95 8 208 
Foreign4,018 2,247 2,095 
Total current tax expense$4,125 $2,496 $2,427 
Deferred expense:
Federal$(26)$— $1 
State26 — — 
Foreign(2,140)(1,310)(939)
Total deferred tax benefit$(2,140)$(1,310)$(938)
Provision for income taxes
$1,985 $1,186 $1,489 
Reconciliations of the differences between the effective and statutory income tax rates are as follows for the fiscal periods indicated:
 Year-ended
December 31,
 202320222021
Federal statutory rate21.0 %21.0 %21.0 %
State income taxes, net of federal benefit0.3 3.2 3.7 
Foreign rate differential(0.5)(0.1)(2.0)
Stock-based compensation
(15.3)(3.8)(14.3)
Global intangible low-taxed income(5.3)(0.6)(1.6)
Non-deductible items(2.3)(1.1)(1.1)
Research and development credits1.0 0.1 0.6 
Change in partnership investment15.7 (0.9)(3.0)
Changes in valuation allowance(25.6)(19.5)(5.4)
Changes in tax rates0.5 — (0.7)
Return to provision
3.2 — — 
Other4.9 1.4 1.0 
(2.4)%(0.3)%(1.7)%
The differences between the U.S. statutory rate and the Company’s effective tax rate for the years ended December 31, 2023, 2022, and 2021 are primarily due to the changes in valuation allowance, state taxes, and stock-based compensation.
The amounts that comprised deferred income tax assets, net are as follows for the fiscal periods indicated (in thousands):
 Year-ended
December 31,
 202320222021
Deferred tax assets:
Net operating loss carryforwards$33,706 $30,785 $19,483 
Sec. 163(j) interest17,032 9,948 3,342 
Tax credits2,033 1,516 1,206 
Stock-based compensation
— 1 68 
Property and equipment76 78 — 
Deferred compensation— — 722 
Operating lease liabilities78 168 — 
Investments66,367 55,952 340 
Other365 180 — 
Less: valuation allowance(119,231)(98,211)(25,092)
Total deferred tax assets$426 $417 $69 
Deferred tax liabilities:
Property and equipment$(809)$(645)$(229)
Intangible assets(7,769)(9,971)(11,513)
Investments— — — 
Operating right-of-use assets(84)(171)— 
Total deferred tax liabilities$(8,662)$(10,787)$(11,742)
Net deferred tax liability
$(8,236)$(10,370)$(11,673)
As of December 31, 2023, the Company has net operating loss carryforwards of approximately $130.0 million for federal income tax purposes, which will be available to offset future taxable income. Due to recent tax legislation, approximately $103.5 million of these net operating losses are eligible for indefinite carryforward, limited by certain taxable income limitations. The federal net operating losses will begin to expire in 2037 if not utilized. The Company is not aware of any restrictions or limitations on use of the net operating losses under Internal Revenue Code Section 382. The Company has net
operating loss carryforwards of approximately $86.3 million for state income tax purposes, which will be available to offset future taxable income. The state net operating losses will begin to expire in 2024 if not utilized. Due to cumulative losses, the Company has recorded a valuation allowance against its net deferred tax assets as of December 31, 2023, 2022 and 2020, respectively.
The Company also has federal research and development tax credit carryforwards of $2.8 million and state research and development tax credit carryforwards of $0.8 million, which begin to expire in 2038 and 2032, respectively, if not utilized.
On December 22, 2017, tax reform legislation referred to as the Tax Cuts and Jobs Act (the “Tax Act”) was enacted in the United States. The Tax Act significantly revised U.S. federal income tax law, including by lowering the corporate income tax rate to 21%, limiting the deductibility of interest expense, implementing a modified territorial tax system and imposing a one-time repatriation tax on deemed repatriated untaxed earnings and profits of U.S.-owned foreign subsidiaries. The Tax Act also enacted provisions for the taxation of Global Intangible Low-Taxed Income (“GILTI”). In 2018, the Company adopted an accounting policy to recognize GILTI as an expense in the period incurred. As such, the Company will not provide for any deferred tax assets or liabilities related to GILTI.
The Company annually conducts an analysis of its tax positions and does not recognize certain tax benefits from uncertain tax positions within the provision for income taxes. A tax benefit is recognized only if it is more likely than not that the tax position will be sustained on examination by taxing authorities based on the technical merits of the position. For such positions, the largest benefit that has a greater than 50% likelihood of being realized upon settlement is recognized in the financial statements.
The following summarizes activity related to unrecognized tax benefits for the fiscal periods indicated (in thousands):
Year-ended
December 31,
202320222021
Unrecognized benefit—beginning of the year$1,056 $908 $— 
Gross increases—current period positions184 196 908 
Gross increases—prior period positions
179 — — 
Gross decreases—prior period positions— (48)— 
Unrecognized benefit—end of the year$1,419 $1,056 $908 
The Company does not expect any significant change in its unrecognized tax benefits within the next 12 months. At December 31, 2023, the Company had $1.4 million of total unrecognized tax benefits recorded against research and development tax credit carryforwards, none of which would impact the effective tax rate if recognized.
The Company has elected to recognize interest and penalties related to uncertain tax positions as a component of interest expense from continuing operations in the accompanying consolidated statements of operations and comprehensive loss. No interest or penalties have been recorded through the year ended December 31, 2023.
The Company files tax returns in the United States and in various foreign and state jurisdictions. All of the Company's tax years remain open to examination by major taxing jurisdictions to which the Company is subject, as carryforward attributes generated in past years may still be adjusted upon examination by the Internal Revenue Service or state and foreign tax authorities if they have or will be used in future periods. The Company is not under examination by any jurisdiction as of December 31, 2023. With few exceptions, the Company is no longer subject to U.S. federal, state, or local income tax examinations by tax authorities for years before 2021.