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Income Tax
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Tax Income Tax
The following table summarizes the components of the provision for (benefit from) income tax (in thousands):
Year Ended December 31,
20222021
Current:
Federal$— $— 
State180 104 
Total current taxes180 104 
Deferred:
Federal1,281 358 
State(195)1,302 
Total deferred taxes1,086 1,660 
Other:
Valuation allowance(1,141)(12,981)
Provision for (benefit from) income taxes$125 $(11,217)
The following table presents a reconciliation the statutory federal income tax rate to the Company's effective income tax rate:
Year Ended December 31,
20222021
Federal statutory rate21.00 %21.00 %
State income taxes, net of federal benefit5.67 %5.17 %
Permanent differences (2.40)%(1.08)%
Return to provision 0.00 %0.00 %
Change in valuation allowance (14.54)%(266.00)%
Change in state tax rate(5.70)%(0.26)%
Other(2.45)%8.55 %
Effective tax rate1.59 %(232.62)%
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 financial performance trends and 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. For the years ended December 31, 2022 and 2021, the Company recorded net decreases to its valuation allowance of $1.4 million and $13.0 million, respectively. 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,
20222021
Deferred tax assets:
Net operating loss and tax credit carryforwards$33,532 $34,773 
Stock-based compensation481 485 
Investments in affiliates1,237 1,335 
Right of use lease liability2,017 1,935 
Bonus accrual1,246 917 
Goodwill amortization(1)362 
Valuation allowance(25,214)(26,599)
Total deferred tax assets13,298 13,208 
Deferred tax liabilities:
Right of use lease asset(1,943)(1,904)
Depreciation and amortization— (4)
Total deferred tax liabilities(1,943)(1,908)
Net deferred income tax assets (liabilities)$11,355 $11,300 
As of December 31, 2022, the Company had $131.7 million of net operating loss (“NOL") carryforwards. These NOLs, if unused, will begin expiring in 2028. 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, 2022, the three-year cumulative shift in ownership of the Company’s stock had not triggered a limitation in the use of our NOL asset.
As of December 31, 2022, 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.