|12 Months Ended|
Dec. 31, 2022
Note 7 – Income Taxes
The components of loss before income taxes consist of the following:
The income tax provision consists of the following:
Income tax provision differs from the amount that would result from applying the federal statutory rate as follows:
For fiscal years 2022, 2021 and 2020, the effective tax rate for the Company was (198.0)%, (3.5)% and (25.4)%, respectively. The Company’s effective tax rate for fiscal years 2022, 2021 and 2020 differs from the U.S. federal rate primarily as a result of non-deductible share-based compensation, the write-off of expired state net operating loss carryforwards, and the change in the valuation allowance maintained against the Company’s deferred tax assets.
Deferred tax assets and deferred tax liabilities consisted of the following:
As of December 31, 2022, federal and state net operating loss (“NOL”) carryforwards were $103,323 and $80,280, respectively. Federal NOL carryforwards of $1,026 were acquired in the acquisition of WAG which are subject to Internal Revenue Code section 382 and limited to an annual usage limitation of $135. Federal NOL carryforwards begin to expire in 2029, while state NOL carryforwards begin to expire in 2023. The state NOL carryforwards expire in the respective tax years as follows:
Under the provisions of ASC 740, management is required to evaluate whether a valuation allowance should be established against its deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. Realization of deferred tax assets is dependent upon taxable income in prior carryback years, estimates of future taxable income, tax planning strategies, and reversal of existing taxable temporary differences. ASC 740 provides that forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in recent years or losses expected in early future years. As of December 31, 2022, mainly due to cumulative losses in recent years, the Company maintained a valuation allowance in the amount of $37,565 against deferred tax assets that were not more likely than not of being realized.
We are subject to U.S. federal income tax as well as income tax of foreign and state tax jurisdictions. The tax years 2018-2022 remain open to examination by the major taxing jurisdictions to which the Company is subject, except the Internal Revenue Service for which the tax years 2019-2022 remain open. The Company does not anticipate a significant change to the amount of unrecognized tax benefits within the next twelve months.
Included in accrued expenses are income taxes (receivable) payable of ($67) and $145 as of December 31, 2022 and January 1, 2022, respectively, consisting primarily of current foreign taxes. Included in other non-current liabilities are
income taxes payable of $990 and $803 as of December 31, 2022 and January 1, 2022, respectively, relating to accrued future foreign withholding taxes.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef