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Income Taxes
12 Months Ended
Dec. 31, 2021
Income Taxes  
Income Taxes

14. Income Taxes

The components of the provision for income taxes are comprised of the following for the years ended December 31:

    

2021

2020

    

2019

Domestic

Current

$

1,365

$

296

$

1,615

Deferred

469

(8,751)

5,992

Foreign

Current

70

Deferred

Total income tax expense (benefit)

$

1,904

$

(8,455)

$

7,607

Income tax results differed from the amount computed by applying the U.S. statutory income tax rate to income (loss) before income taxes for the following reasons for the years ended December 31:

    

2021

2020

    

2019

Statutory income tax expense (benefit)

$

(561)

$

(7,053)

$

4,112

State tax expense

1,120

(450)

1,816

Effect of tax rates in foreign jurisdictions

30

(17)

(37)

Change in fair value of warrant liabilities

224

(494)

(1,209)

Transaction costs

(899)

2,387

Stewardship expense

35

Valuation allowances

452

(279)

226

Compensation

500

201

92

Other

139

536

185

Reported income tax expense (benefit)

$

1,904

$

(8,455)

$

7,607

Income tax expense (benefit) was $1.9 million, ($8.5) million and $7.6 million for the years ended December 31, 2021, 2020 and 2019, respectively. The effective tax rate for the years ended December 31, 2021, 2020, and 2019 was (71.3)%, 25.2% and 38.9%, respectively.  The fluctuation in the rate for the years ended December 31, 2021, 2020 and 2019, respectively, results primarily from the relationship of year-to-date income (loss) before income tax and the discrete treatment of the bonus amounts and transaction costs paid in connection with the Business Combination discussed in Note

3 as well as the fluctuation in the permanent add-back related to the change in fair value of warrant liabilities on the Company’s warrants and the impact of state tax expense based off of gross receipts.  

Deferred Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases, as well as from net operating loss and carryforwards.

Significant components of the deferred tax assets and liabilities for the Company are as follows:

    

2021

    

2020

Deferred tax assets

Deferred compensation

$

$

20

Deferred revenue

7,779

4,169

Intangible assets

9,640

9,668

Tax loss carryforwards

34,303

33,279

Other - net

1,584

1,525

Deferred tax assets gross

53,306

48,661

Valuation allowance

(4,176)

(3,577)

Net deferred income tax asset

49,130

45,084

Deferred tax liabilities

Rental equipment and other plant, property and equipment

(33,709)

(28,718)

Software

(711)

(1,187)

Deferred tax liability

(34,420)

(29,905)

Net deferred income tax asset

$

14,710

$

15,179

Tax loss carryovers for federal and foreign income tax purposes totaled $153.0 million at December 31, 2021 as shown in the below table.  Approximately $7.6 million of these federal and foreign income tax loss carryovers expire between 2023 and 2042. The remaining $145.4 million of federal income tax loss carryovers do not expire. The availability of these tax losses to offset future income varies by jurisdiction. Furthermore, the ability to utilize the tax losses may be subject to additional limitations upon the occurrence of certain events, such as changes in ownership of the Company. Realization is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards. Although realization is not assured, the Company believes it is more likely than not that all of the deferred tax asset will be realized. The amount of the deferred tax asset considered realizable, however, could be reduced if estimates of future taxable income during the carryforward period are reduced. A valuation allowance has been established against the deferred tax assets to the extent it is not more likely than not they will be realized.

Valuation

    

2021

    

Expiration

Allowance

United States

$

147,682

$2,300 expire in 2038. Remaining do not expire.

%

Canada

4,809

2023-2042

100

%

Mexico

498

2024-2032

100

%

Total

$

152,989

  

Unrecognized Tax Positions

No amounts have been accrued for uncertain tax positions as of December 31, 2021 and 2020. However, management's conclusion regarding uncertain tax positions may be subject to review and adjustment at a later date based on ongoing analyses of tax laws, regulations, and interpretations thereof and other factors. The Company does not have any unrecognized tax benefits as of December 31, 2021 and 2020 and does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months. Additionally, no interest or penalty related to uncertain taxes has been recognized in the accompanying consolidated financial statements.

The Company is subject to taxation in US, Canada, Mexico and state jurisdictions. The Company’s tax returns are subject to examination by the applicable tax authorities prior to the expiration of statute of limitations for assessing additional taxes, which generally ranges from two to five years after the end of the applicable tax year. Therefore, as of December 31, 2021, tax years for 2015 through 2021 generally remain subject to examination by the tax authorities. In addition, in the case of certain tax jurisdictions in which the Company has loss carryforwards, the tax authority in some of these jurisdictions may examine the amount of the tax loss carryforward based on when the loss is utilized rather than when it arises.