Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v3.22.4
INCOME TAXES
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The provision (benefit) for income taxes for the years ended December 31, 2022, 2021, and 2020 consisted of the following:
Year Ended
December 31,
2022		 December 31,
2021		 December 31,
2020
Income Tax Expense (benefit)
Current federal tax expense (benefit)
Federal
 $ (471) $ (115) $ 1,732 
State
 (55) 949  768 
Deferred tax (benefit)
Federal
 (2,179) 1,473  1,706 
State
 (180) 136  227 
Valuation allowance —  —  (1,182)
Total
 $ (2,885) $ 2,443  $ 3,251 
A summary of deferred tax assets and liabilities as of December 31, 2022 and 2021 is as follows:
Year Ended
December 31,
2022		 December 31,
2021
Deferred tax assets:
Net operating losses and attributes carryovers $ 7,655  $ — 
Deferred right to use lease liabilities
 12,200  11,573 
Stock based compensation
 1,177  974 
Accumulated depreciation and amortization 27,288  — 
Inventory reserves
 —  239 
Warranty reserves
 —  128 
Accruals and other
 2,008  1,266 
50,328  14,180 
Deferred tax liabilities:
Deferred right to use lease assets
 (11,638) (11,147)
Accumulated depreciation and amortization
 —  (5,392)
(11,638) (16,539)
Deferred tax asset (liability) 38,689  (2,359)
Valuation Allowance
 (38,689) — 
Deferred tax asset (liability), net
 $ —  $ (2,359)
As of December 31, 2022, the Company had cumulative U.S. Net Operating Losses ("NOLs") consisting of carryforwards for federal income tax of $30.0 million, which have an indefinite carryforward period. As of December 31, 2022 and 2021 the Company had cumulative state net operating loss carryforwards of $28.0 million and $1.6 million. State net operating loss carryforwards will begin to expire in calendar year 2035.
NOL carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. The Company has completed an analysis of any limitations on its tax attributes and has assigned a full valuation allowance against them as of December 31, 2022.
The differences between the U.S. Federal statutory income tax rate and the Company’s effective tax rate were as follows for the years ended December 31, 2022 and 2021, and 2020:
Years Ended December 31,
2022 2021 2020
Federal statutory tax rate 21  % 21  % 21  %
State and local income taxes (net of federal tax benefit) 5  % 7  % 6  %
26  % 28  % 27  %
Other —  % —  % 6  %
Stock-based compensation (1) % (8) % 7  %
Return to provision adjustments 0  % (4) % 12  %
Valuation allowance (23) % —  % (14) %
2  % 16  % 38  %

Uncertain Tax Benefits
The Company has not identified any uncertain tax positions as of December 31, 2022. The Company recognizes interest and penalties accrued related to uncertain tax benefits in the income tax provision. There were no Interest and penalties included in other long-term liabilities on the accompanying consolidated balance sheets for years ended December 31, 2022 and 2021. The Company did not expect any significant changes in its unrecognized tax benefits within 12 months of the reporting date. The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. No tax years for the Company are currently under examination by the IRS or state and local tax authorities for income tax purposes. Generally, the Company’s 2019 through 2021 fiscal years remain open for examination and assessment. For various states, the examination and assessment remain open for 2018 through 2021. Years prior to 2018 remain open solely for purpose of examination of the Company’s loss and credit carryforwards.