Income taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income taxes

Note 10 – Income taxes

The provision for income taxes consists of the following: 

	For the Years Ended December 31,
	2021		2020
Current:
Federal	$	1,097	$	398
State and local		951		357
Total current		2,048		755
Deferred		257		841
Provision for income taxes	$	2,305	$	1,596

The following is a reconciliation of income tax expense computed at the U.S. federal statutory tax rate to income tax expense reported in the consolidated statement of operations: 

	2021						2020
	Amount			Percentage			Amount			Percentage
Federal income tax at statutory rate	$	1,179			21.0	%	$	1,015			21.0	%
State and local tax, net		440			7.8	%		428			8.9	%
Other permanent differences		6			0.1	%		12			0.3	%
Section 162m		206			3.7	%		296			6.1	%
Stock based compensation		100			1.8	%		157			3.2	%
Uncertain tax positions		218			3.9	%		(43	)		(0.9	%)
Change in tax rates		198			3.4	%		(245	)		(5.0	%)
Other		(42	)		(0.7	%)		(24	)		(0.5	%)
Provision for income taxes	$	2,305			41.0	%	$	1,596			33.1	%

Prior year amounts have been restated to reflect the correction of errors discussed in Note 1 – Basis of presentation. The tax effects of temporary differences giving rise to deferred income tax assets and liabilities were: 

	December 31,
	2021			2020 (As Restated)
Deferred tax liabilities attributable to:
Accumulated depreciation and amortization	$	(3,401	)	$	(3,281	)
Unrealized gains		(473	)		(467	)
Total deferred tax liabilities		(3,874	)		(3,748	)
Deferred tax assets attributable to:
Net operating losses		6			6
Accrued compensation		170			149
Incentive compensation		164			168
Inventory		324			323
Allowances for doubtful accounts and discounts		5			109
Deferred revenue		10			15
Other		(6	)		34
Total net deferred tax assets		673			804
Net deferred tax liabilities	$	(3,201	)	$	(2,944	)

The following table details the Company's tax attributes related to net operating losses for which it has recorded deferred tax assets. 

Tax Attributes	Gross Amount		Net Amount		Expiration Years
State net operating losses	$	116	$	6		2035
			$	6

During the year, the Company recorded adjustments to its unrecognized tax benefits. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: 

	2021		2020
Balance at January 1	$	95	$	142
Additions based on tax positions of prior years		301		–
Reduction for tax positions of prior years		–		(47	)
Balance at December 31	$	396	$	95

Lifeway is subject to U.S. federal income tax as well as income tax in multiple state and city jurisdictions. With limited exceptions, Lifeway’s calendar year 2018 and subsequent federal and state tax years remain open by statute. The amount of unrecognized tax benefits that, if recognized, would impact the annual effective tax rate was not significant as of December 31, 2021. The annual effective tax rate would have decreased by 3.9% as of December 31, 2021 if the unrecognized tax benefits were recognized.

The amount of interest and penalties recognized in the consolidated statements of operations was $0 and $(16) during 2021 and 2020, respectively. The amount of accrued interest and penalties recognized in the consolidated balance sheets was $0 and $44 at December 31, 2021 and 2020, respectively.