Income Taxes

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

For the three months ended September 30, 2023, the Company recorded an income tax benefit of $1.6 million on pre-tax book income of $1.2 million, resulting in an effective tax rate of approximately (132.3)%. For the three months ended September 30, 2022, the Company recorded an income tax expense of $4.6 million on pre-tax book income of $13.2 million, resulting in an effective tax rate of approximately 35.1%.

For the nine months ended September 30, 2023, the Company recorded an income tax benefit of $0.6 million on pre-tax book loss of $20.4 million, resulting in an effective tax rate of approximately 2.8%. For the nine months ended September 30, 2022, the Company recorded an income tax expense of $8.3 million on pre-tax book income of $24.6 million, resulting in an effective tax rate of approximately 33.8%.

The difference between the effective tax rate and the federal statutory rate of 21.0% for the three and nine month periods ended September 30, 2023, primarily relates to the valuation allowance recognized during the year and discussed further below, changes to our projected full year effective tax rate, 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 and nine month periods ended September 30, 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 September 30, 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.