Income Taxes

3 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

8. Income Taxes

In the first quarter of fiscal year 2023, President Biden signed into law the CHIPS and Science Act and the Inflation Reduction Act. The new legislation provides tax incentives as well as imposes a 15% minimum tax on certain corporation’s book income and a 1% excise tax on certain stock buybacks. The new legislation is effective for the Company in the third quarter of fiscal year 2023. The Company is currently assessing the impact the new legislation will have on the consolidated financial statements.

The Company’s provision for income taxes for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any. Each quarter the Company updates its estimate of the annual effective tax rate and makes a year-to-date adjustment to the provision. The Company recorded a benefit from income taxes of $0.6 million and a provision for income taxes of $0.6 million for the three months ended September 30, 2022, and 2021. The change from an income tax provision to an income tax benefit was primarily due to the changes in the amount of pre-tax income or loss and the Company’s estimated annual effective tax rate.

The Company performed an assessment on the likelihood of realizing the benefits of its deferred tax assets. As of September 30, 2022, the Company has not recorded any significant valuation allowance adjustments based on the information and evidence available at the time. However, if there are unfavorable changes to actual operating results or to projections of future income, the Company may determine that it is more likely than not that such deferred tax assets may not be realizable.

Additionally, in the event that the Company experiences an ownership change within the meaning of Section 382 of the Internal Revenue Code (“IRC”), the Company’s ability to utilize net operating losses, tax credits and other tax attributes may be limited.