Note 14 - Income Taxes

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE 14 INCOME TAXES

Income tax benefit for the three and six months ended June 30, 2022 and June 30, 2021 varies from the amount that would result by applying the applicable U.S. federal corporate income tax rate of 21% to loss before income tax benefit. The following table summarizes the differences:

(in thousands)	Three months ended June 30,						Six months ended June 30,
	2022			2021			2022			2021
Income tax benefit at United States statutory income tax rate	$	(498	)	$	(738	)	$	(1,109	)	$	(638	)
Valuation allowance		11			(580	)		(10	)		(879	)
Non-deductible compensation		21			198			68			336
Non-taxable income		—			—			—			(524	)
Investment income		(8	)		(60	)		(11	)		(43	)
State income tax		158			117			211			170
Change in unrecognized tax benefits(1)		2			(2,853	)		4			(2,815	)
Indemnification receivable		(1	)		599			(1	)		591
Indefinite life intangibles		53			53			107			107
Foreign operations subject to different tax rates		250			—			315			—
Other		6			6			11			12
Income tax benefit	$	(6	)	$	(3,258	)	$	(415	)	$	(3,683	)

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

The Company maintains a valuation allowance for its gross deferred tax assets at June 30, 2022 and December 31, 2021. 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 June 30, 2022 and December 31, 2021 net deferred tax asset, excluding the de ferred income tax asset and liability amounts set forth in the paragraph below. For the three months ended June 30, 2022  and June 30, 2021 , the Company released into income $0.3 million and $0.6 million, respectively ($0.8 million and $1.2 million for the six months ended  June 30, 2022  and June 30, 2021 , respectively), of its valuation allowance associated with business interest expense carryforwards with an indefinite life.  

The Company carries net deferred income tax liab ilities of $27.9  million and $28.6 million at June 30, 2022 and December 31, 2021, respectively, that consists of:

• $8.2 million and $8.2 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;

• $23.8 million and $23.8 million of deferred income tax liabilities related to land and indefinite lived intangible assets;

• $4.1 million and $3.3 million of deferred income tax assets associated with business interest expense carryforwards with an indefinite life;

• $0.5 million and $0.5 million of deferred state income tax assets; and 

• $0.5 million and $0.4 million of deferred state income tax liabilities.

During the three and  six months ended  June 30, 2021 , the Company recorded an income tax benefit of  $2.9 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 June 30, 2022 and December 31, 2021 , the Company carried a liability for unrecognized tax benefits of $0.1 million and $0.1 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 benefit of $1.5 million related to interest and penalty accruals for the three months ended  June 30, 2022 and June 30, 2021 , respectively (expense of $0.1 million and benefit of $1.5 million for the  six months ended  June 30, 2022  and June 30, 2021 , respectively). At June 30, 2022 and December 31, 2021 , the Company carried an accrual for the payment of interest and penalties of $0.1 million and $0.1 million, respectively, included in income taxes payable in the consolidated balance sheets.