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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes

13. INCOME TAXES

The provision for income taxes for the years ended December 31, 2021, and 2020, consisted of the following:

 

 

Year Ended December 31,

 

 

2021

 

 

2020

 

Current:

 

 

 

 

 

 

 

Federal

$

—

 

 

$

—

 

State

 

—

 

 

 

—

 

Total current

 

—

 

 

 

—

 

Deferred:

 

 

 

 

 

 

 

Federal

 

110

 

 

 

10,146

 

State

 

248

 

 

 

5,415

 

Total deferred

 

358

 

 

 

15,561

 

Provision for income taxes

$

358

 

 

$

15,561

 

 

The provision for income taxes for the years ended December 31, 2021, and 2020, differs from that computed at the Federal statutory corporate tax rate as follows:

 

 

Year Ended December 31,

 

 

2021

 

 

2020

 

Federal statutory income tax rate

 

21

%

 

 

21

%

Computed income tax provision at federal statutory rate

$

(1,203

)

 

$

(2,350

)

State income tax

 

(473

)

 

 

(920

)

Equity based compensation

 

(201

)

 

 

—

 

Valuation allowance

 

2,205

 

 

 

18,795

 

Other

 

30

 

 

 

36

 

Provision for income taxes

$

358

 

 

$

15,561

 

 

 

The final determination of our income tax liability may be materially different from our income tax provision. Significant judgment is required in determining our provision for income taxes. Our calculation of the provision for income taxes is subject to our interpretation of applicable tax laws in the jurisdictions in which we file. In addition, our income tax returns are subject to periodic examination by the Internal Revenue Service and other taxing authorities. As of December 31, 2021, the Company had no open income tax examinations. 

The components of deferred tax assets and deferred tax liabilities at December 31, 2021, and 2020, were as follows:

 

 

 

December 31, 2021

 

 

December 31, 2020

 

Deferred tax assets:

 

 

 

 

 

 

 

 

Intangible assets

 

$

13,622

 

 

$

14,427

 

Lease liability

 

 

6,230

 

 

 

7,125

 

Interest deduction carryforward

 

 

4,311

 

 

 

2,219

 

Stock compensation

 

 

726

 

 

 

39

 

Net operating losses

 

 

8,674

 

 

 

8,009

 

Other

 

 

412

 

 

 

285

 

Valuation allowance

 

 

(21,000

)

 

 

(18,795

)

Total deferred tax assets

 

 

12,975

 

 

 

13,309

 

Deferred tax liabilities

 

 

 

 

 

 

 

 

Indefinite-lived intangible assets

 

 

(7,056

)

 

 

(5,939

)

Right of use asset

 

 

(6,477

)

 

 

(7,186

)

Property and equipment

 

 

(1,511

)

 

 

(1,895

)

Total deferred tax liabilities

 

 

(15,044

)

 

 

(15,020

)

Net deferred tax liabilities

 

$

(2,069

)

 

$

(1,711

)

 

A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset (“DTA”) will not be realized. The Company has considered future taxable income and ongoing prudent and feasible tax-planning strategies in assessing the need for the valuation allowance. As of December 31, 2021, and 2020, the Company recorded a valuation allowance against its deferred tax assets, because the Company's management determined that it was more likely than not that certain assets would not be fully realized, as a result of a sharp deterioration of business activity related to the COVID-19 pandemic. 

The Company records certain deferred tax liabilities (“DTLs”) related to indefinite lived intangibles that are not expected to reverse during the carry-forward period. These DTLs can be considered a source of future taxable income to support realization of net operating losses (“NOLs”) that do not expire and DTAs that upon reversal would give rise to NOLs that do not expire. With this consideration, the total valuation allowance recorded at December 31, 2021, and 2020, was $21.0 million and $18.8 million, respectively, resulting in a net $2.1 million and $1.7 million DTL, respectively.

The Company has federal net operating losses (“NOLs”) of $34.8 million and state NOLs of $22.1 million available to offset future taxable income. The federal and certain state NOL carryforwards do not expire, and the remaining state NOL carryforwards begin expiring in the year ending December 2039.

Accounting Standards Codification paragraph 740-10 clarifies the accounting for uncertainty in income taxes by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken within a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest benefit that is greater than 50 percent likely of being realized upon ultimate settlement. As of December 31, 2021, the Company has no uncertain tax positions.