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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2024
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 from continuing operations are as follows at the respective year ends:
(in thousands) | 2024 |  | 2023
Deferred income tax assets: |  |  |
Inventory valuation reserves | $ | 1,570 |  |  | $ | 1,829 |
Inventory capitalization | 550 |  |  | 360 |
Accrued bonus | 318 |  |  | 127 |
State net operating loss carryforwards | 2,055 |  |  | 2,239 |
Federal net operating loss carryforwards | 4,075 |  |  | 2,209 |
Lease liabilities | 7,484 |  |  | 7,415 |
Interest Limitation Carryforwards | 1,488 |  |  | 1,396 |
Intangible asset basis differences | 781 |  |  | 2,564 |
Other | 1,444 |  |  | 1,932 |
Total deferred income tax assets | 19,765 |  |  | 20,071 |
State valuation allowance | (2,026) |  |  | (1,641) |
Federal valuation allowance | (7,040) |  |  | — |
Total net deferred income tax assets | 10,699 |  |  | 18,430 |
Deferred income tax liabilities: |  |  |
Fixed asset basis differences | 4,010 |  |  | 5,478 |
Prepaid expenses | 300 |  |  | 445 |
Lease assets | 6,709 |  |  | 6,699 |
Total deferred income tax liabilities | 11,019 |  |  | 12,622 |
Deferred income taxes, net | $ | (320) |  |  | $ | 5,808 |
Significant components of the provision for income taxes are as follows:
(in thousands) | 2024 |  | 2023 |  |
Current: |  |  |  |  |
Federal | $ | (42) |  |  | $ | (561) |  |  |
State | 69 |  |  | 191 |  |  |
Total current | 27 |  |  | (370) |  |  |
Deferred: |  |  |  |  |
Federal | 5,552 |  |  | (5,965) |  |  |
State | 580 |  |  | (589) |  |  |
Total deferred | 6,132 |  |  | (6,554) |  |  |
Total | $ | 6,159 |  |  | $ | (6,924) |  |  |
The reconciliation of income tax computed at the U. S. federal statutory tax rates to income tax expense is:
(in thousands) | 2024 |  | 2023 |  |
Amount |  | % |  | Amount |  | % |  |  |  |
Tax at U.S. statutory rates | $ | (1,064) |  |  | 21.0 | % |  | $ | (8,616) |  |  | 21.0 | % |  |  |  |
State income taxes, net of federal tax benefit | 112 |  |  | (2.2) | % |  | (585) |  |  | 1.4 | % |  |  |  |
State valuation allowance | 400 |  |  | (7.9) | % |  | 270 |  |  | (0.7) | % |  |  |  |
Federal valuation allowance | 6,539 |  |  | (129.2) | % |  | — |  |  | — | % |  |  |  |
Stock option compensation | 37 |  |  | (0.7) | % |  | 87 |  |  | (0.2) | % |  |  |  |
Other nondeductible expenses | (5) |  |  | 0.1 | % |  | 33 |  |  | (0.1) | % |  |  |  |
Goodwill impairment | — |  |  | — | % |  | 2,049 |  |  | (5.0) | % |  |  |  |
Other, net | 140 |  |  | (2.7) | % |  | (162) |  |  | 0.5 | % |  |  |  |
Total | $ | 6,159 |  |  | (121.6) | % |  | $ | (6,924) |  |  | 16.9 | % |  |  |  |
The Company's effective tax rate for 2024 was less than the U.S. statutory rate of 21% primarily due to discrete tax charges associated with recording a valuation allowance on cumulative US Federal and state deferred tax assets. The Company's effective tax rate for 2023 was less than the U.S. statutory rate of 21% primarily driven by tax benefits associated with non-deductible goodwill impairment. The Company made no income tax payments in 2024 and $0.9 million in 2023, respectively. The Company has $19.4 million of U.S. Federal net operating loss carryforwards and $7.1 million of interest limitation carryforwards at the end of 2024 compared to $10.5 million of U.S. Federal net operating loss carryforwards and $6.6 million interest limitation carryforwards at the end of 2023. During the period, the Company determined that these carryforwards are unrealizable and not more likely than not to be utilized in future periods. The majority of these carryforwards are not subject to expiration. In addition, on a gross basis the Company had state net operating loss carryforwards of $46.2 million and $49.0 million at the end of 2024 and 2023, respectively. As of the end of 2024, the Company had recognized a state valuation allowance of $2.0 million. This represents a $0.4 million increase year-over-year primarily driven by losses in jurisdictions for which we believe it is not more likely than not to be utilized in future periods. The majority of these losses will expire between the years of 2024 and 2044, while certain losses are not subject to expiration. 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 2020 or state examinations for years before 2019. The Company had no uncertain tax position activity during 2024 or 2023. 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 2024.

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