Income Taxes

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

For the three months ended March 31, 2023, the Company recorded income tax expense of $5.8 million on pre-tax book loss of $15.7 million, resulting in an effective tax rate of approximately (37.1)%. For the three months ended March 31, 2022, the Company recorded an income tax benefit of $0.2 million on pre-tax book loss of $1.1 million, resulting in an effective tax rate of approximately 16.6%.

The difference between the effective tax rate and the federal statutory rate of 21.0% for the three month period ended March 31, 2023, primarily relates to valuation allowance recognized during the year and discussed further below, state and local income taxes, and the effect of certain statutory non-deductible expenses.

The difference between the effective tax rate and the federal statutory rate of 21.0% for the three month period ended March 31, 2022, primarily relates to state and local income taxes and the effect of certain statutory non-deductible expenses.

The Company recognizes the benefits of deferred tax assets only as its assessment indicates that it is more likely than not that the deferred tax assets will be recognized in accordance with ASC Topic 740, Income Taxes ("ASC 740"). The Company reviews the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to utilize existing deferred tax assets. As of March 31, 2023, the Company recorded a valuation allowance against its deferred tax assets associated with disallowed interest expense carryforwards generated during the year since the full benefit of these assets may not be realized. The Company will continue to monitor the valuation of deferred tax assets and tax liabilities, which requires judgment in assessing the likely future tax consequences of events that are recognized in the Company's financial statements or tax returns as well as judgment in projecting future profitability.