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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | 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. Significant components of the Company's deferred tax assets and liabilities are as follows at the respective year ends:
(in thousands) | 2021 |  | 2020
Deferred income tax assets: |  |  |
Inventory valuation reserves | $ | 310 |  |  | $ | 176 |
Inventory capitalization | 1,207 |  |  | 1,120 |
Accrued bonus | 680 |  |  | 328 |
State net operating loss carryforwards | 1,606 |  |  | 1,669 |
Federal net operating loss carryforwards | 890 |  |  | — |
Lease liabilities | 8,069 |  |  | 7,484 |
Accrued Federal Insurance Contributions Act ("FICA") deferral | 155 |  |  | 299 |
Intangible asset basis differences | 2,980 |  |  | 3,706 |
Other | 550 |  |  | 534 |
Total deferred income tax assets | 16,447 |  |  | 15,316 |
Federal & State valuation allowance | (3,700) |  |  | (4,243) |
Total net deferred income tax assets | 12,747 |  |  | 11,073 |
Deferred income tax liabilities: |  |  |
Fixed asset basis differences | 7,276 |  |  | 5,562 |
Prepaid expenses | 381 |  |  | 276 |
Lease assets | 7,523 |  |  | 7,067 |
Interest rate swap | — |  |  | 68 |
Other | — |  |  | 57 |
Total deferred income tax liabilities | 15,180 |  |  | 13,030 |
Deferred income taxes, net | $ | (2,433) |  |  | $ | (1,957) |
Significant components of the provision for income taxes are as follows:
(in thousands) | 2021 |  | 2020 |  |
Current: |  |  |  |  |
Federal | $ | 6,786 |  |  | $ | (6,024) |  |  |
State | 538 |  |  | 23 |  |  |
Total current | 7,324 |  |  | (6,001) |  |  |
Deferred: |  |  |  |  |
Federal | (1,943) |  |  | 1,011 |  |  |
State | (128) |  |  | 284 |  |  |
Total deferred | (2,071) |  |  | 1,295 |  |  |
Total | $ | 5,253 |  |  | $ | (4,706) |  |  |
The reconciliation of income tax computed at the U. S. federal statutory tax rates to income tax expense is:
(in thousands) | 2021 |  | 2020 |  |
Amount |  | % |  | Amount |  | % |  |  |  |
Tax at U.S. statutory rates | $ | 5,354 |  |  | 21.0 | % |  | $ | (6,714) |  |  | 21.0 | % |  |  |  |
State income taxes, net of federal tax benefit | 371 |  |  | 1.5 | % |  | 73 |  |  | (0.2) | % |  |  |  |
Federal and State valuation allowance | (539) |  |  | (2.1) | % |  | 2,541 |  |  | (7.9) | % |  |  |  |
CARES Act carryback benefits | — |  |  | — | % |  | (1,123) |  |  | 3.5 | % |  |  |  |
Stock option compensation | (196) |  |  | (0.8) | % |  | 65 |  |  | (0.2) | % |  |  |  |
Executive compensation limitation | 59 |  |  | 0.2 | % |  | 280 |  |  | (0.9) | % |  |  |  |
Transaction costs | 134 |  |  | 0.5 | % |  | — |  |  | — | % |  |  |  |
Other nondeductible expenses | 51 |  |  | 0.2 | % |  | 35 |  |  | (0.1) | % |  |  |  |
Other, net | 19 |  |  | 0.1 | % |  | 137 |  |  | (0.5) | % |  |  |  |
Total | $ | 5,253 |  |  | 20.6 | % |  | $ | (4,706) |  |  | 14.7 | % |  |  |  |
The Company's effective tax rate for 2021 was less than the U.S. statutory rate of 21% primarily driven by windfall tax benefits associated with share-based compensation and the release of valuation allowances on certain deferred tax assets partially offset by state taxes and transaction costs, net of federal benefit. The Company made income tax payments of $1.6 million and $16,000 in 2021 and 2020, respectively. The Company has $4.2 million of U.S. Federal net operating loss carryforwards and no interest limitation carryforwards at the end of 2021 compared with no U.S. Federal net operating loss carryforwards or interest limitation carryforwards at the end of 2020. The U.S. Federal net operating loss carryforwards were acquired in the DanChem acquisition and are subject to certain limitations under IRC Section 382. However, the Company believes that these losses are more likely than not to be utilized. In addition, on a gross basis the Company had state operating loss carryforwards of $36.2 million and $39.4 million at the end of 2021 and 2020, respectively. The majority of these losses will expire between the years of 2022 and 2039, while certain losses are not subject to expiration. During 2021, the Company recognized a combined U.S. federal and state valuation allowance of $3.7 million because it is more likely than not that the underlying deferred tax assets will not be realized. This represents a $0.5 million decrease year over year, primarily driven by deferred tax liabilities acquired in the DanChem acquisition. The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. The Company is no longer subject to U.S. federal examinations for years before 2018 or state examinations for years before 2017. The Company had no uncertain tax position activity during 2021 or 2020. The Company's continuing practice is to recognize interest and/or penalties related to income tax matters in the provision for income taxes. The Company had no accruals for uncertain tax positions including interest and penalties at the end of 2021.

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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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