INCOME TAXES

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

8. INCOME TAXES

Income Tax (Expense) Benefit

A reconciliation of the U.S. federal statutory tax rate to our income tax (expense) benefit from continuing operations for 2021 and 2020, is as follows (in thousands):

	Years Ended December 31,
	2021			2020
U.S. statutory rate		21.0	%		21.0	%
Increase (decrease) resulting from:
Permanent differences		(3.1	)%		(0.1	)%
State income taxes		0.5	%		0.4	%
Other		(0.1	)%		(0.2	)%
Discrete items
Vesting of common stock		(1.4	)%		(1.4	)%
Change in valuation allowance		(44.3	)%		(36.2	)%
PPP Loan forgiveness		39.5	%		—
Return to provision and other		(11.6	)%		16.9	%
Income tax (expense) benefit		0.5	%		0.4	%

Significant components of our income tax (expense) benefit from continuing operations for 2021 and 2020, were as follows (in thousands):

	Years Ended December 31,
	2021			2020
Current
Federal	$	—		$	—
State		—			(20	)
Total current		—			(20	)
Deferred
Federal		2,185			2,722
State		(20	)		2,455
Valuation allowance		(2,141	)		(5,105	)
Total deferred		24			72
Income tax (expense) benefit	$	24		$	52

Deferred Taxes

Significant components of our deferred tax assets and liabilities at December 31, 2021 and 2020, were as follows (in thousands):

	December 31,
	2021			2020
Deferred tax assets
Leases	$	233		$	319
Employee benefits		1,208			1,471
Accrued losses on uncompleted contracts		2,572			3,015
Stock based compensation expense		247			225
Federal net operating losses		21,724			19,345
State net operating losses		3,299			3,620
R&D and other tax credits		938			806
Other		545			398
Total deferred tax assets		30,766			29,199
Deferred tax liabilities
Property, plant and equipment and AHFS		(1,285	)		(2,632	)
Prepaid insurance		(231	)		(511	)
Total deferred tax liabilities		(1,516	)		(3,143	)
Net deferred tax assets		29,250			26,056
Valuation allowance		(29,331	)		(26,168	)
Net deferred taxes (1)	$	(81	)	$	(112	)

(1) Amounts are included in other noncurrent liabilities on our Balance Sheet.

At December 31, 2021 and 2020, we had total DTAs of $30.8 million and $29.2 million, respectively (including U.S. federal net operating losses (“NOL(s)”) DTAs of $21.7 million and $19.3 million, respectively). On a periodic and ongoing basis, we evaluate our DTAs (including our NOL DTAs) and assess the appropriateness of our valuation allowance(s) (“VA(s)”). In assessing the need for a VA, we consider both positive and negative evidence related to the likelihood of realizing our DTAs. If, based upon the available evidence, our assessment indicates that it is more likely than not that some or all of the DTAs will not be realized, we record a VA. Our assessments include, among other things, the amount of taxable temporary differences that will result in future taxable income, the value and quality of our backlog, evaluations of existing and anticipated market conditions, analysis of recent and historical operating results (including cumulative losses over multiple periods) and projections of future results and strategic plans, as well as asset expiration dates. As a result of our assessment and due to cumulative losses for the three years ended December 31, 2021, we believe the negative evidence outweighs the positive evidence with respect to our ability to realize our U.S. federal NOL DTAs, and accordingly, at December 31, 2021 and 2020, we had VAs of $29.3 million and $26.2 million, respectively, offsetting our total DTAs.

At December 31, 2021, we had gross U.S. federal NOL carryforwards (excluding VAs) of $103.4 million, of which $42.3 million will expire in 2037 with the remaining U.S. federal NOL carryforwards eligible to be carried forward indefinitely, subject to an 80% limitation on taxable income in each year. We had gross state NOL carryforwards (excluding VAs) of $45.1 million, which will expire from 2035 through 2041.

Uncertain Tax Positions

Reserves for uncertain tax positions are recognized when we consider it more likely than not that additional tax will be due in excess of amounts reflected in our income tax returns, irrespective of whether or not we have received tax assessments. Interest and penalties on uncertain tax positions are recorded within income tax expense. At December 31, 2021 and 2020, we had no material reserves for uncertain tax positions. Tax returns subject to examination by the U.S. Internal Revenue Service are open for years after 2015.