Income Taxes

6 Months Ended

Jun. 30, 2023

Income Taxes

Income Taxes

8.           Income Taxes

The income tax expense in the Condensed Consolidated Statements of Operations is approximately $1,479,000 and $1,063,000 for the three and six-months ended June 30, 2023, respectively, compared to an income tax benefit of approximately $167,000 and $80,000 for the three- and six-months ended June 30, 2022, respectively. The tax expense is the result of recording a valuation allowance (tax expense) of approximately $3,182,000 during the second quarter against the net deferred tax assets (net of deferred tax liabilities) of $3,355,000 as of June 30, 2023 (valuation reserve of $173,000 was recorded against the net deferred tax assets of $1,245,000 as of December 31, 2022). The valuation allowance (tax expense) was recorded due to management determining that the potential exists that it is more likely than not that the Company will not realize the net deferred tax assets. Accordingly, no deferred tax assets are recorded on the consolidated balance sheet as of June 30, 2023.

The effective tax rate expense for the three-and six-month month period ended June 30, 2023, is 18.4% and 10.6%, respectively, compared to an effective tax rate benefit for the three-and six-month period ended June 30, 2022, of 17.1% and 14.2%, respectively. The difference between the statutory rate of 21% and the effective tax rate expense in 2023 is due to the recording of a valuation allowance against the net deferred tax asset (net of deferred tax liabilities) in 2023.