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INCOME TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The Company recorded income tax provision of $4,556 and $4,360 for the year ended December 31, 2023 and December 31, 2022 and income tax benefit of $857 for the prorated period from December 27, 2021 to December 31, 2021. No provisions/benefits were made for federal or state income taxes for the year ended December 31, 2021 as prior to the Business Combination, the Company was not subject to income taxes due to the then equity structure of the Company and was subject to pass through income taxes. Federal, state and local income tax returns for years prior to 2019 are no longer subject to examination by tax authorities. The Company is currently under audit by federal tax authorities for fiscal 2020. There have been no proposed adjustments at this stage of the examination. The examination is expected to be finalized in fiscal 2024. The Company does not expect any material impact to the financial statements due to settlement of this audit.

Income before the provision and benefit for income taxes as shown in the accompanying consolidated statements of operations is as follows:
Year Ended December 31,
202320222021
Income before income taxes$117,076 $136,175 $82,557 
Income before income taxes attributable to period subsequent to business combination for the year ended December 31, 2021 (1)$— $— $12,206 

(1) The income before income taxes for the year ended December 31, 2021 was attributable only to prorated period subsequent to the consummation of the Business Combination on December 27, 2021.

The Company calculated income taxes on prorated income only for the days remaining subsequent to the Business Combination for the year ended December 31, 2021. The components of the benefit for income taxes for the year ended December 31, 2023, December 31, 2022 and December 31, 2021 consisted of the following:
Year Ended December 31,
202320222021
Current:
Federal$1,810 $1,140 $— 
State79 27 — 
1,889 1,167 — 
Deferred:
Federal3,091 3,477 (856)
State(424)(284)(1)
2,667 3,193 (857)
Total Provision (benefit) from income taxes$4,556 $4,360 (857)

The reconciliation of income taxes at the federal statutory rate to provision for income taxes for the years ended December 31, 2023, December 31, 2022 and December 31, 2021 were as follows:

Year Ended December 31,
202320222021
U.S. federal statutory tax rate21.00 %21.00 %21.00 %
State taxes0.72 %0.28 %0.03 %
Valuation allowances3.26 %1.11 %— 
NCI adjustment(17.37)%(17.52)%(18.53)%
Permanent differences(3.82)%(0.64)%(3.35)%
OCI Adjustment0.09 %(0.27)%— %
Other temporary differences0.01 %(0.76)%— %
Effective income tax rate3.89 %3.20 %(0.85)%

The Company’s overall effective tax rate is affected primarily by the non-controlling interest adjustment as the income attributable to the non-controlling interest is pass-through income.

Provisions have been made for deferred taxes based on the differences between the basis of the assets and liabilities for financial statement purposes and the basis of the assets and liabilities for tax purposes using currently enacted tax rates and regulations that will be in effect when the differences are expected to be recovered or settled.
The components of the deferred tax assets were as follows:
Year Ended December 31,
202320222021
Deferred Tax Assets:
Investment in Holdings$34,162 $32,256 $29,102 
Imputed Interest727 686 623 
Earnout consideration liability— — 970 
Stock Options/ RSU's1 — — 
Net operating loss carryforward— — 819 
Total deferred tax assets$34,890 $32,942 $31,514 
Valuation Allowance(11,193)(7,373)(5,864)
Total deferred tax assets net of valuation allowance$23,697 $25,569 $25,650 

The deferred taxes primarily result from the Business Combination where the Company recorded a carryover basis on all assets for financial accounting purposes and a fair value step-up on a portion of the assets for income tax purposes. The Company’s deferred tax asset was reviewed for expected utilization using a “more likely than not” approach by assessing the available positive and negative evidence surrounding its recoverability. Accordingly, a valuation allowance has been recorded against the Company’s deferred tax asset, as it was determined that it was “more likely than not” that the Company’s deferred tax assets would not be fully realized. As of December 31, 2023, the Company determined that considering all of these factors, a $11,193 valuation allowance would be established, an increase in valuation allowance of $3,820 compared to the year ended December 31, 2022. The Company will continue to assess and evaluate strategies that will enable the deferred tax asset, or portion thereof, to be utilized, and will reduce the valuation allowance appropriately at such time when it is determined that the “more likely than not” criteria is satisfied.

There were no significant uncertain tax positions taken, or expected to be taken, in a tax return that would be determined to be an unrecognized tax benefit taken or expected to be taken in a tax return that should have been recorded on the Company’s financial statements for the years ended December 31, 2023, or 2022. Additionally, there were no interest or penalties outstanding as of the fiscal year ended December 31, 2023 and December 31, 2022.

On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). Under the provisions of the CARES Act, the Company is eligible for a refundable employee retention credit subject to certain criteria. In connection with the CARES Act, the Company adopted a policy to recognize the employee retention credit when realized under ASC 450-30. Accordingly, the Company recorded a $1,291 employee retention credit during the year ended December 31, 2022, which is reported as other income in the statements of operations.