Income taxes

12 Months Ended

Dec. 31, 2022

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,
	2022			2021
Current:
Federal	$	645		$	1,097
State and local		444			951
Total current		1,089			2,048
Deferred		(172	)		257
Provision for income taxes	$	917		$	2,305

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: 

	2022						2021
	Amount			Percentage			Amount			Percentage
Federal income tax at statutory rate	$	392			21.0%		$	1,179			21.0%
State and local tax, net		287			15.4%			440			7.8%
Other permanent differences		8			0.4%			6			0.1%
Section 162m		229			12.2%			206			3.7%
Stock based compensation		127			6.8%			100			1.8%
Uncertain tax positions		–			–%			218			3.9%
Change in tax rates		(83	)		(4.4%	)		198			3.4%
Other		(43	)		(2.3%	)		(42	)		(0.7%	)
Provision for income taxes	$	917			49.1%		$	2,305			41.0%

The tax effects of temporary differences giving rise to deferred income tax assets and liabilities were: 

	December 31,
	2022			2021
Deferred tax liabilities attributable to:
Accumulated depreciation and amortization	$	(3,394	)	$	(3,401	)
Unrealized gains		(472	)		(473	)
Total deferred tax liabilities		(3,866	)		(3,874	)
Deferred tax assets attributable to:
Net operating losses		6			6
Accrued compensation		287			170
Incentive compensation		194			164
Inventory		328			324
Allowances for doubtful accounts and discounts		5			5
Deferred revenue		–			10
Other		17			(6	)
Total net deferred tax assets		837			673
Net deferred tax liabilities	$	(3,029	)	$	(3,201	)

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: 

	2022			2021
Balance at January 1	$	396		$	95
Additions based on tax positions of prior years		–			301
Settlement for tax positions of prior years		(396	)		–
Balance at December 31	$	–		$	396

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 2019 and subsequent federal and state tax years remain open by statute. As of December 31, 2022, the unrecognized tax benefit is $0.

The amount of interest and penalties recognized in the consolidated statements of operations was $0 during 2022 and 2021, respectively. The amount of accrued interest and penalties recognized in the consolidated balance sheets was $0 at December 31, 2022 and 2021, respectively.