XML 26 R15.htm IDEA: XBRL DOCUMENT v3.22.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
The Company accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes. These provisions require a company to determine whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. The Company did not have any unrecognized tax positions as of December 31, 2021 and 2020.
The federal returns for tax years 2018 through 2020 remain open to examination, and the tax years 2017 through 2020 remain open to examination by certain other taxing jurisdictions to which the Company is subject. Additional years may be open to the extent attributes are being carried forward to an open year.
Deferred income taxes arise from the temporary differences in the recognition of income and expenses for tax purposes. A valuation allowance is established when the Company believes that it is more likely than not that some portion of its deferred tax assets will not be realized.
Deferred tax assets and liabilities were comprised of the following at December 31, 2021 and 2020: 
(In thousands)20212020
Deferred tax assets:
Accounts receivable and financing receivables$625 $773 
Accrued vacation678 691 
Stock-based compensation1,905 2,568 
Deferred revenue988 283 
Accrued severance 44 4 
Accrued liabilities 15 — 
Right of use asset1,740 — 
Credits2,472 3,274 
Net operating loss3,560 4,301 
Deferred tax assets12,027 11,894 
Less: Valuation allowance622 636 
Total deferred tax assets$11,405 $11,258 
Deferred tax liabilities:
Intangible assets$18,002 $19,603 
Accrued liabilities and other4,668 956 
Fixed assets875 1077 
Right of use liability$1,740 $— 
Total deferred tax liabilities$25,285 $21,636 
Total net deferred tax liability$(13,880)$(10,378)
Significant components of the income tax provision for the years ended December 31, 2021, 2020 and 2019 were as follows:
(In thousands)202120202019
Current provision:
Federal$731 $244 $860 
State413 1,539 1,357 
Deferred provision:
Federal3,331 2,766 951 
State171 (11)60 
Total income tax provision$4,646 $4,538 $3,228 
The difference between income taxes at the U.S. federal statutory income tax rate of 21% for the years ended December 31, 2021, 2020 and 2019, and those reported in the consolidated statements of operations for the years ended December 31, 2021, 2020 and 2019 are as follows:
(In thousands)202120202019
Income taxes at U.S. federal statutory rate$4,846 $3,945 $4,976 
Provision-to-return adjustments117 455 (66)
State income tax, net of federal tax effect509 908 978 
Tax credits(1,274)(958)(2,196)
Contingent consideration— — (1,050)
Stock-based compensation(74)255 151 
Change in valuation allowance(14)(165)173 
Non-deductible compensation - 162(m)510 — — 
Other26 98 262 
Total income tax provision$4,646 $4,538 $3,228 
Our effective tax rates for the years ended December 31, 2021, 2020 and 2019 were 20%, 24% and 14% respectively. Our effective tax rate for 2019 was significantly impacted by the non-taxable nature of our recorded gain on contingent
consideration, which served to reduce the year's effective tax rate by over 4%. 2020 lacked any benefit to the effective tax rate from such contingent consideration and, when combined with more punitive provision to return adjustments primarily related to R&D tax credits and lowered estimates for qualifying research expenditures during the year, thereby lowering estimates for the 2020 R&D tax credit, resulted in a significant increase in the effective tax rate for 2020. Lowered provision to return adjustments resulted in an incremental 2.6% decrease in our effective tax rate for 2021 compared to 2020, while decreased tax shortfalls related to stock-based compensation arrangements resulted in an incremental 1.9% decrease in our effective tax rate for 2021 compared to 2020.
We have federal net operating loss carryforwards related to the acquisition of HHI and Get Real Health of $7.9 million, $12.2 million and $27.9 million for the years ending December 31, 2021, 2020, and 2019, respectively, which expire at various dates from 2026 to 2035. We have state net operating loss carryforwards related to the acquisition of HHI and Get Real Health of $29.9 million, $34.4 million and $34.5 million for the years ending December 31, 2021, 2020, and 2019, respectively, which expire at various dates from 2023 to 2036.
Realization of deferred tax assets associated with the state net operating loss carryforwards is dependent upon generating sufficient taxable income prior to their expiration. We believe it is more likely than not that the benefit from certain state NOL carryforwards associated with the acquisition of Get Real Health will not be realized. In recognition of this risk, we have provided a valuation allowance on the deferred tax assets related to these state NOL carryforwards of $0.6 million after both December 31, 2021 and 2020, respectively.