Income Taxes	6 Months Ended
Jun. 30, 2021
Income Taxes
NOTE 11 - Income Taxes	11. Income Taxes The Company recorded income tax expense of $3,600 in the second quarter of 2021, or negative 0.11% of pre-tax loss, compared to $1.3 million income tax benefit, or 8.67% of pre-tax loss in the second quarter of 2020. The difference in the effective federal income tax rate from the normal statutory rate in the second quarter of 2021 was primarily related to the recording of a valuation allowance of $575,000 for the second quarter of 2021 on U.S. deferred tax assets. The Company recorded an income tax expense of $52,800 for the six months ended June 30, 2021, or negative 0.62% of pre-tax loss, compared to a $4.0 million income tax benefit, or 14.4% of pre-tax loss, for the six months ended June 30, 2020. The difference in the effective federal income tax rate from the normal statutory rate was primarily related to the recording of a valuation allowance of $1.7 million for the six months ended June 30, 2021 on U.S. deferred tax assets not supported by either future taxable income or availability of future reversals of existing taxable temporary differences, partially offset by deferred foreign tax assets that are supported by existing temporary differences. In assessing the valuation of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income or availability to carryback the losses to taxable income during periods in which those temporary differences become deductible. The Company considered several factors when analyzing the need for a valuation allowance including the Company’s current five-year cumulative loss through June 30, 2021, the impacts of the COVID-19 Pandemic on the worldwide airline industry and the Company’s recent filing for protection under Chapter 11 of the Bankruptcy Code. Based on this analysis, the Company has concluded that a valuation allowance is necessary for its U.S. deferred tax assets not supported by either future taxable income or availability of future reversals of existing taxable temporary differences and has recorded a valuation allowance of $575,000 and $1.7 million for the three months and six months ended June 30, 2021, respectively. Additionally, the Company has concluded that based on its analysis, some of its foreign net operating loss carrybacks are not expected to be realized based on limitations on the utilization of its foreign net operating losses, and therefore has recorded a foreign tax expense of $0 and $54,300 for the reduced tax refund for the three months and six months ended June 30, 2021, respectively. The tax treatment of the bankruptcy is dependent on the interpretation and the application of the Stalking Horse Agreement and the Sale Order. Depending on the final resolution of these matters and the occurrence or nonoccurrence of certain future events, there may be a future tax liability associated with the disposition of the aircraft pursuant to the Stalking Horse Agreement.

Income Taxes

6 Months Ended

Jun. 30, 2021

11. Income Taxes

The Company recorded income tax expense of $3,600 in the second quarter of 2021, or negative 0.11% of pre-tax loss, compared to $1.3 million income tax benefit, or 8.67% of pre-tax loss in the second quarter of 2020. The difference in the effective federal income tax rate from the normal statutory rate in the second quarter of 2021 was primarily related to the recording of a valuation allowance of $575,000 for the second quarter of 2021 on U.S. deferred tax assets.

The Company recorded an income tax expense of $52,800 for the six months ended June 30, 2021, or negative 0.62% of pre-tax loss, compared to a $4.0 million income tax benefit, or 14.4% of pre-tax loss, for the six months ended June 30, 2020. The difference in the effective federal income tax rate from the normal statutory rate was primarily related to the recording of a valuation allowance of $1.7 million for the six months ended June 30, 2021 on U.S. deferred tax assets not supported by either future taxable income or availability of future reversals of existing taxable temporary differences, partially offset by deferred foreign tax assets that are supported by existing temporary differences.

In assessing the valuation of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income or availability to carryback the losses to taxable income during periods in which those temporary differences become deductible. The Company considered several factors when analyzing the need for a valuation allowance including the Company’s current five-year cumulative loss through June 30, 2021, the impacts of the COVID-19 Pandemic on the worldwide airline industry and the Company’s recent filing for protection under Chapter 11 of the Bankruptcy Code. Based on this analysis, the Company has concluded that a valuation allowance is necessary for its U.S. deferred tax assets not supported by either future taxable income or availability of future reversals of existing taxable temporary differences and has recorded a valuation allowance of $575,000 and $1.7 million for the three months and six months ended June 30, 2021, respectively. Additionally, the Company has concluded that based on its analysis, some of its foreign net operating loss carrybacks are not expected to be realized based on limitations on the utilization of its foreign net operating losses, and therefore has recorded a foreign tax expense of $0 and $54,300 for the reduced tax refund for the three months and six months ended June 30, 2021, respectively. The tax treatment of the bankruptcy is dependent on the interpretation and the application of the Stalking Horse Agreement and the Sale Order. Depending on the final resolution of these matters and the occurrence or nonoccurrence of certain future events, there may be a future tax liability associated with the disposition of the aircraft pursuant to the Stalking Horse Agreement.

- 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.

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