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Income Taxes
12 Months Ended
Dec. 31, 2023
Income Taxes  
Income Taxes

10. Income Taxes

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

    

2023

2022

    

2021

Domestic

Current

$

13,147

$

2,488

$

1,365

Deferred

37,903

29,882

469

Foreign

Current

70

Deferred

Total income tax expense

$

51,050

$

32,370

$

1,904

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:

    

2023

2022

    

2021

Statutory income tax expense (benefit)

$

47,198

$

22,325

$

(561)

State tax expense

3,956

2,797

1,120

Effect of tax rates in foreign jurisdictions

(46)

(28)

30

Change in fair value of warrant liabilities

(1,903)

6,664

224

Valuation allowances

510

310

452

Compensation

306

383

500

Other

1,029

(81)

139

Reported income tax expense

$

51,050

$

32,370

$

1,904

Income tax expense was $51.1 million, $32.4 million and $1.9 million for the years ended December 31, 2023, 2022 and 2021, respectively. The effective tax rate for the years ended December 31, 2023, 2022, and 2021 was 22.7%, 30.4% and (71.3)%, respectively.  The fluctuation in the rate for the years ended December 31, 2023, 2022 and 2021, respectively, results primarily from the relationship of year-to-date income (loss) before income tax, the fluctuation in the permanent add-back related to the change in fair value of warrant liabilities on the Company’s warrants, the impact of state tax expense based off of gross receipts, and a compensation deduction limitation during each of the years ended December 31, 2023, 2022 and 2021.  

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:

    

2023

    

2022

Deferred tax assets (liabilities)

Stock-based compensation

$

3,191

$

4,793

Deferred revenue

1,216

1,621

Intangible assets

8,859

9,157

Tax loss carryforwards

2,588

30,649

Operating lease obligations

4,437

5,152

Interest carryforwards

-

4,997

Other - net

727

23

Deferred tax assets gross

21,018

56,392

Valuation allowance

(5,023)

(4,486)

Net deferred income tax asset

15,995

51,906

Deferred tax liabilities

Rental equipment and other plant, property and equipment

(63,536)

(60,771)

Operating lease right-of-use assets

(4,297)

(5,955)

Software

(95)

(352)

Prepaid expenses

(1,141)

-

Deferred tax liability

(69,069)

(67,078)

Net deferred income tax liability

$

(53,074)

$

(15,172)

Tax loss carryovers for foreign income tax purposes totaled approximately $9 million at December 31, 2023 as shown in the below table. Approximately $9 million of these foreign income tax loss carryovers expire between 2024 and 2044. Realization is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards. 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

    

2023

    

Expiration

Allowance

Canada

$

8,432

2032-2044

100

%

Mexico

546

2024-2033

100

%

Total

$

8,978

  

Unrecognized Tax Positions

No amounts have been accrued for uncertain tax positions as of December 31, 2023 and 2022. 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, 2023 and 2022 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 the statute of limitations for assessing additional taxes, which generally ranges from two to five years. Therefore, as of December 31, 2023, tax years for 2017 through 2023 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.