|12 Months Ended|
Dec. 31, 2020
|Income Tax Disclosure [Abstract]|
|INCOME TAXES||. INCOME TAXES
For the years ended December 31, 2020 and 2019, the Company had net income and loss, respectively, but due to timing differences in recognizing income for tax, no current tax expense or benefit was recorded. The Company recorded a full valuation allowance on its deferred tax assets as of December 31, 2019. As of December 31, 2020, the Company released a portion of the valuation allowance, with the exception of certain tax credits and net operating losses that were determined to be unrealizable. The Company recorded deferred tax liabilities of approximately $21.8 million, with a corresponding deferred provision for federal and state income taxes.
The components of the provision for income taxes are as follows:
The reconciliation of taxes at the federal statutory rate to our provision for income taxes was as follows:
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. When realization of the deferred tax asset is more likely than not to occur, the benefit related to the deductible temporary differences attributable to operations is recognized as a reduction of income tax expense. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of December 31, 2020, management determined that there is sufficient positive evidence to conclude that it is more likely than not that deferred tax assets of approximately $27.8 million are realizable. Management's determination was based on the Company's achievement of three years of cumulative pretax income in the U.S. federal tax jurisdiction, which was primarily driven by the change in fair value of our investment in LMC. We therefore reduced the valuation allowance accordingly. Significant components of the Company’s deferred tax assets and liabilities are as follows:
At December 31, 2020 and 2019, the Company has approximately $90.6 million of federal net operating loss (“NOL”) carry-forwards which expire through 2037. Additionally, at December 31, 2020 and 2019, the Company had approximately $130.9 million and $49.0 million, respectively, of federal NOLs that carry-forward indefinitely. Additionally, at December 31, 2020 Additionally, at December 31, 2020 and 2019, the Company had approximately $0.9 million and $0.8 million, respective of state and local NOL carry-forwards, which expire through 2039. The NOL carry-forwards may be limited in certain circumstances, including ownership changes.
Under the provisions of the Internal Revenue Code, the net operating loss and tax credit carry-forwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Certain tax attributes are subject to an annual limitation as a result of certain cumulative changes in ownership interest of significant shareholders which could constitute a change of ownership as defined under Internal Revenue Code Section 382. The Company has completed a full analysis of historical ownership changes and determined that a portion of the net operating losses to date have a limitation on future deductibility. Approximately $8.4 million of net operating losses incurred prior to 2014 will be unable to offset future taxable income and have been reserved via a valuation allowance to reduce the deferred tax asset to the expected realizable amount.
Tabular reconciliation of unrecognized tax benefits
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2020, and 2019, due to the Company’s continued losses, no amounts of interest and penalties have been recognized in the Company’s consolidated statements of operations. If the unrecognized tax benefits were reversed, a deferred tax asset and corresponding valuation allowance would be recorded, and thus the reversal would have no impact on the effective rate.
The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions and local jurisdictions. Generally, the Company’s 2017 through 2019 tax years remain open and subject to examination by federal, state and local taxing authorities. However, federal, state, and local net operating losses from 2009 through 2019 are subject to review by taxing authorities in the year utilized.
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