Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The provision for income taxes consists of the following:

	Years Ended December 31,
(in thousands, except for rate)	2022			2021
Current portion of income tax expense:
Federal	$	(10)		$	2,741
State and other	219			2,326
	209			5,067
Deferred portion of income tax expense (benefit):
Federal	—			9,527
State and other	—			1,078
	—			10,605
Total income tax expense	$	209		$	15,672
Effective tax rate	(2)		%	21		%

Income tax expense (benefit) differed from the amount that would be computed by applying the U.S. statutory federal income tax rate of 21% to income before income taxes for the years ended December 31, 2022 and 2021 as follows:

	Years Ended December 31,
(in thousands)	2022		2021
Federal statutory rate	$	(1,829)	$	15,975
State income taxes, net of federal benefit	115		2,283
Permanent differences	1,284		(680)
Tax credits	—		(443)
Valuation allowances	825		(1,290)
Changes in tax rates	(87)		(33)
Stock-based compensation	10		86
Return to provision and other true-ups	(109)		(40)
Other	—		(186)
Income tax expense	$	209	$	15,672

Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or liability and their reported amounts in the accompanying Consolidated Balance Sheets. These temporary differences result in taxable or deductible amounts in future years. Details of the Company’s deferred tax assets and liabilities are summarized as follows: 

	As of December 31,
(in thousands)	2022		2021
Deferred tax assets
Tax credits	$	86,125	$	86,097
Net operating loss carryforwards	2,892		2,388
Intangible assets	2,638		5,126
Employee related liabilities	1,968		1,971
Operating lease obligations	1,828		1,585
ARO, net of reimbursements	1,448		—
Research and development capitalization	739		—
Other investments	518		556
Equity method investments	325		1,584
Inventory	315		—
Interest limitations	77		—
Other	429		138
Total deferred tax assets	99,302		99,445
Less valuation allowance	(88,293)		(87,468)
Deferred tax assets	11,009		11,977
Less: Deferred tax liabilities
Property and equipment and other	(7,702)		(8,203)
Right of use operating lease assets	(1,800)		(1,497)
Upfront customer consideration	(1,507)		(1,747)
Inventory	—		(197)
ARO, net of reimbursements	—		(333)
Total deferred tax liabilities	(11,009)		(11,977)
Net deferred tax assets	$	—	$	—

Accounting for income taxes requires that companies assess whether a valuation allowance should be recorded against a deferred tax asset based on an assessment of the amount of the deferred tax asset that is "more likely than not" to be realized. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized. 

The Company assesses a valuation allowance recorded against deferred tax assets at each reporting date. The determination of whether a valuation allowance is appropriate requires the evaluation of positive and negative evidence that can be objectively verified. Consideration must be given to all sources of taxable income available to realize a deferred tax asset, including, as applicable, the future reversal of existing temporary differences, future taxable income forecasts exclusive of the reversal of temporary differences and carryforwards, taxable income in carryback years and tax planning strategies. In estimating taxes, the Company assesses the relative merits and risks of the appropriate tax treatment of transactions taking into account statutory, judicial and regulatory guidance.

As of December 31, 2022, the Company concluded it is more likely than not the Company will not generate sufficient taxable income within the applicable net operating loss and tax credit carry-forward periods to realize any of its net deferred tax assets. For the year ended December 31, 2022, the Company increased a valuation allowance from December 31, 2021 by $0.8 million and as of December 31, 2022, has a valuation allowance equal to 100% of its net deferred tax assets. In reaching this conclusion, the Company primarily considered forecasts of future taxable losses.

The following table presents the approximate amount of federal and state net operating loss carryforwards and federal tax credit carryforwards available to reduce future taxable income, along with the respective range of years that the net operating loss and tax credit carryforwards would expire if not utilized:

	As of December 31,
(in thousands)	2022		Beginning expiration year	Ending expiration year
Federal net operating loss carryforwards	$	467	Indefinite	Indefinite
State and other operating loss carryforwards	$	2,425	2026	2037
Federal tax credit carryforwards	$	86,125	2032	2041

The following table sets forth a reconciliation of the beginning and ending unrecognized tax positions on a gross basis for the years ended December 31, 2022 and 2021:

	Years Ended December 31,
(in thousands)	2022		2021
Balance as of January 1	$	54	$	946
Lapse of applicable statute of limitations	—		(892)
Balance as of December 31	$	54	$	54

For the years ended December 31, 2022 and 2021, the Company did not record any adjustments or recognize interest expense for uncertain tax positions. Interest and penalties related to uncertain tax positions are accrued and included in the "Interest expense" line item in the Consolidated Statements of Operations. Additional information related to the components of "Interest expense" is included in Note 9.

The Company files income tax returns in the U.S. and various states. The Company is no longer subject to U.S. federal examinations by tax authorities for years before 2019. The Company is generally no longer subject to state examinations by tax authorities for years before 2015.