Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The summary of the income tax expense for the years ended December 31, 2022, 2021, and 2020 is as follows (dollars in thousands):
A reconciliation of income tax expense at the U.S. federal statutory income tax rate to annual income tax expense at the Company's effective tax rate is as follows (dollars in thousands):
The significant components of the Company's deferred income tax assets (liabilities) are as follows (dollars in thousands):
In assessing the realizability of deferred income tax assets, the Company considers whether it is more-likely-than-not that some or all of the deferred income tax assets will not be realized. The ultimate realization of the deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the net operating loss (NOL) and tax credit carryforwards are available. The Company considers projected future taxable income, the scheduled reversal of deferred income tax liabilities, and available tax planning strategies that can be implemented by the Company in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the NOL and credit carryforwards are available to reduce income taxes payable, management had determined it is not more-likely-than-not to realize all such net deferred tax assets. A reconciliation of the deferred asset valuation allowance is as follows (dollars in thousands):
(1) Amount comprised principally of acquisitions and purchase accounting adjustments in connect with acquisitions The Company recorded a valuation allowance of $70.5 million as of December 31, 2021, of which $69.7 million is associated with the Adamas Acquisition. The Company recorded a valuation allowance release of $9.1 million as of December 31, 2022, of which $8.9 million is associated with the Adamas Acquisition. The valuation allowance is primarily related to federal and state net operating losses carryforwards acquired from the Adamas Acquisition that are not expected to be realizable in the future. The Company has NOL carryforwards in several jurisdictions. Due to changes in the Company's ownership, the utilization of net operating loss carryforwards that can be used to offset future taxable income, are subject to annual limits in accordance with Internal Revenue Code (IRC) provisions, as well as similar state provisions. In addition, states may also impose other future limitations through state legislation or similar measures. Despite the NOL carryforwards, the Company may incur higher state income tax expense in the future. As of December 31, 2022, the U.S. federal and state NOL carryforwards amounted to approximately $416.7 million and $488.4 million, respectively, which will expire in various years beginning in 2031. For the year ended December 31, 2022, the Company utilized federal NOLs of approximately $34.8 million and state NOLs of approximately $24.8 million. As of December 31, 2022, the Company had no remaining federal research and development credit carryforwards. As of December 31, 2021, the Company had available research and development credit carryforwards of $1.6 million, which became available in 2022. The Company is no longer subject to U.S. Federal income tax examinations for years prior to 2019. Operating loss or tax credit carryforwards generated prior to 2019 may be subject to tax audit adjustment. The Company accounts for uncertain income tax positions pursuant to the guidance in ASC Topic 740, Income Taxes. The Company recognizes interest and penalties related to uncertain tax positions, if any, in income tax expense. Some uncertain income tax position liabilities have been recorded against the Company's deferred income tax assets to offset such tax attribute carryforwards and other positions that cannot be offset by tax attributes until liability has been booked. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (dollars in thousands):
The Company recorded $1.7 million, $0.1 million, and $0.6 million of net tax benefit in 2022, 2021, and 2020, respectively, as a result of the expiration of statutes of limitation. The Company also recorded $30 thousand, $0.3 million, and $0.3 million for uncertain tax positions related to research and development credits in 2022, 2021, and 2020, respectively, and an additional benefit of $40 thousand related to a prior year position. The Company does not anticipate a material impact to the financial statements in the next 12 months as a result of uncertain tax positions and expiring statutes of limitation.
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