Note 14 - Income Taxes

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE 14 INCOME TAXES

Income tax benefit for the three and nine months ended September 30, 2021 and September 30, 2020 varies from the amount that would result by applying the applicable U.S. federal corporate income tax rate of 21% to loss from continuing operations before income tax benefit. The following table summarizes the differences:

(in thousands)	Three months ended September 30,						Nine months ended September 30,
	2021			2020			2021			2020
Income tax benefit at United States statutory income tax rate	$	(563	)	$	(295	)	$	(1,202	)	$	(704	)
Valuation allowance		(2,161	)		(155	)		(3,039	)		(35	)
Non-deductible compensation		187			25			523			7
Non-taxable income		—			—			(524	)		—
Investment income		(115	)		1			(158	)		(120	)
State income tax		117			31			287			98
Change in unrecognized tax benefits(1)		2			56			(2,813	)		193
Indemnification receivable		—			(12	)		591			(41	)
Indefinite life intangibles		54			54			161			161
Other		23			16			35			32
Income tax benefit	$	(2,456	)	$	(279	)	$	(6,139	)	$	(409	)

(1) Includes interest and penalty expense related to unrecognized tax benefits.

The Company maintains a valuation allowance for its gross deferred tax assets at September 30, 2021 and December 31, 2020. The Company's operations have generated substantial operating losses in prior years. These losses can be available to reduce income taxes that might otherwise be incurred on future taxable income; however, it is uncertain whether the Company will generate the taxable income necessary to utilize these losses or other reversing temporary differences. This uncertainty has caused management to place a full valuation allowance on its September 30, 2021 and December 31, 2020 net deferred tax asset, excluding the deferred income tax asset and liability amounts set forth in the paragraph below. For the three months ended September 30, 2021 and September 30, 2020, the Company expensed $0.6 million and released into income $0.4 million, respectively (releases into income of $0.6 million and $0.9 million for the nine months ended  September 30, 2021 and September 30, 2020, respectively), of its valuation allowance associated with business interest expense carryforwards with an indefinite life.  During the three months ended September 30, 2021, the Company released into income $3.3 million of its valuation allowance, as a result of its acquisition of PWI, due to net deferred income tax liabilities that are expected to reverse during the period in which the Company will have deferred income tax assets available.

The Company carries net deferred income tax liabilities of $28.1 million and $27.6 million at September 30, 2021 and December 31, 2020, respectively, that consists of:

• $7.6 million and $7.6 million of deferred income tax liabilities that are scheduled to reverse in periods after the expiration of the Company's consolidated U.S. net operating loss carryforwards;

• $23.0 million and $21.9 million of deferred income tax liabilities related to land and indefinite lived intangible assets;

• $1.9 million and $1.3 million of deferred income tax assets associated with business interest expense carryforwards with an indefinite life; and

• $0.6 million and $0.6 million of deferred state income tax assets.

During the nine months ended September 30, 2021, the Company recorded an income tax benefit of $2.8 million for the release of a liability for unrecognized tax benefits (including interest and penalties) that had been included in income taxes payable in the consolidated balance sheets.  As of September 30, 2021 and December 31, 2020, the Company carried a liability for unrecognized tax benefits of $0.1 million and $1.4 million, respectively, which is included in income taxes payable in the consolidated balance sheets. The Company classifies interest and penalty accruals, if any, related to unrecognized tax benefits as income tax expense. The Company recorded income tax expense of less than $0.1 million and $0.1 million related to interest and penalty accruals for the three months ended  September 30, 2021 and September 30, 2020, respectively (benefit of $1.5 million and expense of $0.2 million for the nine months ended  September 30, 2021 and September 30, 2020, respectively). At September 30, 2021 and December 31, 2020, the Company carried an accrual for the payment of interest and penalties of $0.1 million and $1.6 million, respectively, included in income taxes payable in the consolidated balance sheets.