Income Taxes

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Note 13: Income Taxes

We are subject to taxation in all jurisdictions in which we operate within the United States and Canada. Substantially all of our income before income taxes for all periods presented is U.S. sourced.

We record a valuation allowance against deferred tax assets when we determine that it is more likely than not that all or a portion of a deferred tax asset will not be realized. The valuation allowance primarily relates to federal and state net operating loss carryforwards, as well as disallowed interest expense deduction carryforwards. While the Acquisition resulted in a significant increase in deferred tax liabilities, these tax liabilities, which give rise to future taxable income against which tax carryforwards may be applied, are subject to limitations. Federal and state income tax limitation rules are expected to limit the application of our carryforwards and, accordingly, we record a valuation allowance to reduce our deferred tax assets to amounts expect to be realized. The Company's effective tax rate for the three months ended March 31, 2022 and 2021 differs from the U.S. federal statutory tax rate due primarily to the recording of valuation allowances. During three months ended March 31, 2022, the tax rate also differed from the U.S. federal statutory tax rate as a result of state tax expense recorded during the period. The increase in the effective tax rate in three months ended March 31, 2022 as compared to three months ended March 31, 2021 is primarily due to the near break-even pre-tax loss in the current period.