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Income Tax
 12 Months Ended
Dec. 31, 2021
Income Tax  
Income Tax

14. Income Tax

 

The Company files a consolidated federal income tax return including all its domestic subsidiaries. State tax returns are filed on a consolidated, combined or separate basis depending on the applicable laws relating to the Company and its subsidiaries.

 

Components of tax expense consist of the following:

 

 

 

2021

 

 

2020

 

 

2019

 

Current:

 

 

 

 

 

 

 

 

 

Federal

 

$-

 

 

$-

 

 

$-

 

State and Local

 

 

11

 

 

 

8

 

 

 

8

 

Foreign

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

11

 

 

 

8

 

 

 

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred:

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

 

-

 

 

 

-

 

 

 

-

 

State and Local

 

 

-

 

 

 

-

 

 

 

                      -

 

Foreign

 

 

(139)

 

 

(984)

 

 

1,123

 

Income tax expense/(benefit)

 

$(128)

 

$(976)

 

$1,131

 

 

The Company recorded $0 and $0.1 million deferred tax liability as of December 31, 2021 and 2020 which is recorded in other long term liabilities in the Consolidated Balance Sheets. The deferred tax liability resulted as India subsidiary had income for the year ended December 31, 2020. U.S. loss and foreign income (loss) before income taxes are as follows:

 

 

 

Year Ended December 31,

 

 

 

2021

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

United States

 

$(45,723)

 

$(37,496)

 

$(43,419)

Foreign

 

 

(1,552)

 

 

(139)

 

 

5,073

 

Pretax loss

 

$(47,275)

 

$(37,635)

 

$(38,346)
Income tax benefit differs from the amounts computed by applying the statutory U.S. federal income tax rate (21%) to loss before income taxes as a result of the following:

 

 

 

Year Ended December 31,

 

 

 

2021

 

 

2020

 

 

2019

 

Income tax benefit at the federal statutory rate

 

$(9,928)

 

$(7,903)

 

$(8,052)

State tax benefit

 

 

(2,875)

 

 

(4,066)

 

 

(48)

Foreign tax differential

 

 

(96)

 

 

(185)

 

 

900

 

Stock-based compensation

 

 

252

 

 

 

166

 

 

 

133

 

Interest Expense

 

 

1,842

 

 

 

1,315

 

 

 

478

 

GILTI Inclusion

 

 

-

 

 

 

-

 

 

 

849

 

Prior year true-ups

 

 

140

 

 

 

(770)

 

 

1,493

 

Other

 

 

497

 

 

 

258

 

 

 

166

 

Credits

 

 

(2,074)

 

 

(1,388)

 

 

-

 

Valuation Allowance

 

 

12,114

 

 

 

11,597

 

 

 

5,212

 

Income Tax Benefit

 

 

(128)

 

 

(976)

 

 

1,131

 

Effective Tax Rate

 

 

0.27%

 

 

2.59%

 

 

-2.95%

 

The components of the net deferred tax asset or (liability) are as follows:

 

 

 

Year Ended December 31,

 

 

 

2021

 

 

2020

 

Deferred Tax Assets

 

 

 

 

 

 

Organizational Costs, Start-up and Intangible Assets

 

$5,068

 

 

$6,325

 

Stock Based Compensation

 

 

1,174

 

 

 

397

 

NOLs, Unabsorbed Depreciation and R&D Credits C/F's

 

 

61,624

 

 

 

56,530

 

Interest expense carryover

 

 

17,436

 

 

 

13,389

 

Ethanol Credits

 

 

1,500

 

 

 

1,500

 

Carbon Oxide Sequestration Credit

 

 

3,460

 

 

 

1,387

 

Accrued Expenses

 

 

3,312

 

 

 

2,813

 

Operating Lease Liability

 

 

1,082

 

 

 

1,232

 

Other, net

 

 

737

 

 

 

486

 

Total Deferred Tax Assets

 

 

95,392

 

 

 

84,059

 

Valuation Allowance

 

 

(83,260)

 

 

(71,145)

Net Deferred Tax Assets

 

 

12,133

 

 

 

12,914

 

 

 

 

 

 

 

 

 

 

Deferred Tax Liabilities

 

 

 

 

 

 

 

 

Right of Use Asset

 

 

(1,238)

 

 

(1,362)

Property, Plant & Equipment

 

 

(10,882)

 

 

(11,600)

Other, net

 

 

(13)

 

 

(91)

Total Deferred Tax Liabilities

 

 

(12,133)

 

 

(13,053)
Net Deferred Tax Liabilities

 

$-

 

 

$(139)

 

Based on the Company’s evaluation of current and anticipated future taxable income, the Company believes it is more likely than not that insufficient taxable income will be generated to realize the net deferred tax assets, and accordingly, a valuation allowance has been set against these net deferred tax assets.

We do not provide for U.S. income taxes for any undistributed earnings of the Company’s foreign subsidiaries, as the Company considers these to be permanently reinvested in the operations of such subsidiaries and have a cumulative foreign loss. At December 31, 2021, 2020, and 2019 these undistributed earnings losses totaled $8.9 million, $8.0 million, and $7.0 million, respectively. If any earnings were distributed, some countries may impose withholding taxes. However, due to the Company’s overall deficit in foreign cumulative earnings and its U.S. loss position, the Company does not believe a material net unrecognized U.S. deferred tax liability exists.

 

ASC 740 Income Taxes provides that the tax effects from an uncertain tax position can be recognized in the Company’s financial statements only if the position is more-likely-than-not of being sustained on audit, based on the technical merits of the position. Tax positions that meet the recognition threshold are reported at the largest amount that is more-likely-than-not to be realized. This determination requires a high degree of judgment and estimation. The Company periodically analyzes and adjusts amounts recorded for the Company’s uncertain tax positions, as events occur to warrant adjustment, such as when the statutory period for assessing tax on a given tax return or period expires or if tax authorities provide administrative guidance or a decision is rendered in the courts. The Company does not reasonably expect the total amount of uncertain tax positions to significantly increase or decrease within the next 12 months. As of December 31, 2021, the Company’s uncertain tax positions were not significant for income tax purposes.

 

The following describes the open tax years, by major tax jurisdiction, as of December 31, 2021:

 

United States — Federal

 

2007 – present

 

United States — State

 

2008 – present

 

India

 

2013 – present

 

Mauritius

 

2006 – present

 

 

As of December 31, 2021, the Company had U.S. federal NOL carryforwards of approximately $201.0 million and state NOL carryforwards of approximately $252.0 million.  The Company also has approximately $1.5 million of alcohol and cellulosic biofuel credit carryforwards. The Company also has approximately $3.5 million of Carbon Oxide Sequestration Credit carryforwards The federal net operating loss and other tax credit carryforwards expire on various dates between 2027 and 2037. The state net operating loss carryforwards expire on various dates between 2027 through 2041. Under the current tax law, net operating loss and credit carryforwards available to offset future income in any given year may be limited by US or India statute regarding net operating loss carryovers and timing of expirations or upon the occurrence of certain events, including significant changes in ownership interests. The Company’s India subsidiary has unabsorbed depreciation loss carryforwards as of December 31, 2021 of approximately $5.1 million in U.S. dollars, which do not expire.