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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The following table summarizes the components of the provision for (benefit from) income tax (in thousands):
| Year Ended December 31,
| 2021 |  | 2020
Current: |  |  |
Federal | $ | — |  |  | $ | — |
State | 104 |  |  | — |
Total current taxes | 104 |  |  | — |
Deferred: |  |  |
Federal | 358 |  |  | (143) |
State | 1,302 |  |  | (26) |
Total deferred taxes | 1,660 |  |  | (169) |
Other: |  |  |
Valuation allowance | (12,981) |  |  | 194 |
Provision for (benefit from) income taxes | $ | (11,217) |  |  | $ | 25 |
The following table presents a reconciliation the statutory federal income tax rate to the Company's effective income tax rate:
| Year Ended December 31,
| 2021 |  | 2020
Federal statutory rate | 21.00 | % |  | 21.00 | %
State income taxes, net of federal benefit | 5.17 | % |  | 4.93 | %
Permanent differences | (1.08) | % |  | (22.16) | %
Return to provision | 0.00 | % |  | 0.79 | %
Change in valuation allowance | (266.00) | % |  | 8.25 | %
Change in state tax rate | (0.26) | % |  | (13.16) | %
Other | 8.55 | % |  | 1.50 | %
Effective tax rate | (232.62) | % |  | 1.15 | %
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. Prior to 2021, the Company had recorded valuation allowances for certain tax attributes and deferred tax assets due the existence of sufficient uncertainty regarding the future realization of those deferred tax assets through future taxable income. In June 2021, based on its recent financial performance and current forecasts of future operating results, the Company determined that it was more likely than not that a portion of the deferred tax assets related to its net operating loss ("NOL") carryforwards would be utilized in future periods. As a result, the Company recorded an $11.3 million income tax benefit in the second quarter of 2021 that represented a partial release of its valuation allowance. If, in the future, the Company believes that it is more likely than not that the rest of the deferred tax benefits will be realized, the full valuation allowance will be reversed. Conversely, if future results of operations are lower than currently forecasted, the Company may need to re-establish a valuation allowance accordingly. The following table summarizes the components of the Company's deferred tax assets and liabilities (in thousands):
| December 31,
| 2021 |  | 2020
Deferred tax assets: |  |  |
Net operating loss and tax credit carryforwards | $ | 34,773 |  |  | $ | 37,899 |
Stock-based compensation | 485 |  |  | 648 |
Investment in affiliates | 1,335 |  |  | 1,192 |
Right of use lease liability | 1,935 |  |  | 2,057 |
Bonus accrual | 917 |  |  | — |
Depreciation and amortization | — |  |  | 37 |
Goodwill amortization | 362 |  |  | — |
Other | — |  |  | 9 |
Valuation allowance | (26,599) |  |  | (39,708) |
Total deferred tax assets | 13,208 |  |  | 2,134 |
Deferred tax liabilities: |  |  |
Right of use lease asset | (1,904) |  |  | (2,052) |
Depreciation and amortization | (4) |  |  | — |
Goodwill amortization | — |  |  | (103) |
Total deferred tax liabilities | (1,908) |  |  | (2,155) |
Net deferred income tax assets (liabilities)1 | $ | 11,300 |  |  | $ | (21) |
1 | 2020 amount is included in accounts payable and accrued liabilities on the consolidated balance sheet
As of December 31, 2021, the Company has approximately $139 million of net operating loss (“NOL") carryforwards. These NOLs, if unused, will begin expiring in 2027. Under Code Section 382 (“Section 382”) rules, if a change of ownership is triggered, the Company’s NOL assets and possibly certain other deferred tax assets may be impaired. Given Section 382’s broad definition, an ownership change could be the unintended consequence of otherwise normal market trading in the Company’s stock that is outside of the Company’s control. In an effort to preserve the availability of these NOLs, the Company has adopted a Section 382 rights agreement that is scheduled to expire on March 27, 2025. The Section 382 rights agreement helps to reduce the likelihood of an unintended “ownership change”, thus preserving the value of these future tax benefits. We estimate that as of December 31, 2021, the three-year cumulative shift in ownership of the Company’s stock has not triggered a limitation in the use of our NOL asset. However, if an ownership change were to occur, the Section 382 limitation would not be expected to materially impact the Company’s financial position or results of operations as of December 31, 2021. As of December 31, 2021, there were no uncertain tax positions that, if recognized, would affect the Company's effective tax rate. We file U.S. and state income tax returns in jurisdictions with varying statutes of limitations. All of our income tax returns remain subject to examination by federal and state tax authorities due to the availability of our NOL carryforwards.

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- Definition 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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