Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note 12. Income Taxes

Significant components of deferred tax assets were as follows:

	As of December 31,
	2023			2022
U.S. federal tax loss carry–forward	$	18,656		$	18,349
U.S. State tax loss carry–forward		382			304
Equity based compensation		8,567			8,567
Fixed assets, intangible assets and goodwill		(51	)		(50	)
Accruals		2			12
Long-term investments		(7	)		(7	)
Total deferred tax assets		27,549			27,175
Less: valuation allowance		(27,549	)		(27,175	)
Net deferred tax asset	$	-		$	—

As of December 31, 2023, the Company had the following tax attributes:

	Amount		Begins to expire
U.S. federal net operating loss carry–forwards	$	88,840		Fiscal 2023
U.S. State net operating loss carry–forwards - Georgia		8,406		Unlimited
U.S. State net operating loss carry–forwards - North Carolina		7,955		Fiscal 2031

MGT CAPITAL INVESTMENTS, INC.

NOTES TO THE FINANCIAL STATEMENTS

(Dollars in thousands, except share and per–share amounts)

The reconciliation of income tax expense computed at the U.S. federal statutory rate to the income tax provision for the years ended December 31, 2023 and 2022 is as follows:

	As of December 31,
	2023			2022
Expected Federal Tax		-21.0	%		-21.0	%
State income taxes (net of federal benefit)		-1.2	%		-1.9	%
Permanent adjustments		15.5	%		12.3	%
True up of prior year deferred tax assets		0.0	%		-0.7	%
Change in state tax rate		0.0	%		-2.6	%
Expiration of tax attributes		0.6	%		0.0	%
Change in valuation allowance		6.1	%		13.9	%
Effective tax rate		0.0	%		0.0	%

As it is not more likely than not that the resulting deferred tax benefits will be realized, a full valuation allowance has been recognized for such deferred tax assets. For the year ended December 31, 2023, the valuation allowance increased by $374. Federal and state laws impose substantial restrictions on the utilization of tax attributes in the event of an “ownership change,” as defined in Section 382 of the Internal Revenue Code. As of December 31, 2023, the Company performed a high-level review of its changes in ownership and determined that a change of control event likely occurred under Section 382 of the Internal Revenue Code and the Company’s net operating loss carryforwards are likely to be limited.

The Company has adopted the provisions of ASC 740-10-25, which provides recognition criteria and a related measurement model for uncertain tax positions taken or expected to be taken in income tax returns. ASC 740-10-25 requires that a position taken or expected to be taken in a tax return be recognized in the financial statements when it is more likely than not that the position would be sustained upon examination by tax authorities.

Tax positions that meet the more likely than not threshold are then measured using a probability weighted approach recognizing the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company had no tax positions relating to open income tax returns that were considered to be uncertain.

The Company files income tax returns in the U.S. federal jurisdiction, and Georgia jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non–U.S. income tax examinations by tax authorities for years before 2017.