Income Taxes

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Note 10:  Income Taxes

Management estimates the annual effective income tax rate quarterly, based on current annual forecasted results. Items unrelated to current year ordinary income are recognized entirely in the period identified as a discrete item of tax. The quarterly income tax provision includes tax on ordinary income provided at the most recent estimated annual effective tax rate (“ETR”), increased or decreased for the tax effect of discrete items.

For the nine months ended September 30, 2022 and 2021, our estimated annual effective tax rates applied to ordinary income were 30.9% and 136.9%, respectively. The difference between the federal statutory rate of 21.0% and the projected annual ETR in the current year is primarily due to research and development credits. The difference between the federal statutory rate and the estimated annual effective tax rate in 2021 is primarily due to the non-taxable gain on extinguishment of debt recorded in 2021 based on forgiveness of the PPP loan.  

Discrete items during the nine months ended September 30, 2022 totaled approximately $0.2 million of expense primarily from the expiration of stock options, and the ETR for the first nine months of the year was 27.8%.  Discrete items for the first nine months of the prior year were not significant and the ETR was 131.2%.