Income Taxes

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

In determining quarterly provisions for income taxes, the Company uses the annual estimated effective tax rate applied to the actual year-to-date profit or loss, adjusted for discrete items arising in that quarter. The Company updates its estimate of its annual effective tax rate at the end of each quarterly period. The estimate takes into account annual forecasted income (loss) before income taxes, the geographic mix of income (loss) before income taxes and any significant permanent tax items. The Company did not have provision for income taxes for the three and nine months ended September 30, 2022 and 2021. The income taxes for the nine months ended September 30, 2022, reflected the impact of a change in U.S. tax law effective January 1, 2022, which requires the capitalization and amortization of research and experimental expenditures incurred after December 31, 2021. Under the Tax Cuts and Jobs Act, for tax years beginning after December 31, 2021, taxpayers are required to capitalize and amortize certain research and experimental expenditures that are paid or incurred in connection with their trade or business. Due to the expected tax loss, the provision did not have tax impact to the quarter. The Company continues to maintain a full valuation allowance against its net deferred tax assets due to the uncertainty surrounding realization of such assets.

The Inflation Reduction Act of 2022, which includes certain tax measures, was signed into law by President Joe Biden on August 16, 2022. The act contains two main tax provisions 1) a new corporate alternative minimum tax imposed on certain corporations meeting average annual financial statement income of more than $1 billion for the three tax-year period and 2) an excise tax imposed upon share repurchased by certain publicly traded corporations. This provision is effective for tax years beginning after December 31, 2022. The act is not expected to have a material impact to the Company’s consolidated financial statements and related disclosures.

The Company accounts for the uncertainty in income taxes by utilizing a comprehensive model for the recognition, measurement, presentation and disclosure in financial statements of any uncertain tax positions that have been taken or are expected to be taken on an income tax return. There had been no changes in the estimated uncertain tax benefits recorded as of September 30, 2022 compared to December 31, 2021.