Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

19. Income Taxes

Income / (loss) before provision for income taxes is attributable to the following geographic locations for the years ended December 31:

	For the years ended December 31,
	2022			2021
United States	$	(35,293	)	$	(45,860	)
Foreign Countries		3,562			2,480
Total loss before income taxes	$	(31,731	)	$	(43,380	)

The provision for income taxes consists of the following for the years ended December 31:

	For the years ended December 31,
	2022			2021
Current tax:
Federal tax	$	–		$	–
State tax		21			4
Foreign countries		2,439			1,672
Total current tax		2,460			1,676
Deferred tax:
Federal tax	$	–			–
State tax		–			–
Foreign countries		(468	)		(222	)
Total deferred tax		(468	)		(222	)
	$	1,992		$	1,454

The reconciliation between the actual income tax expense and income tax computed by applying the statutory U.S. Federal income tax rate for the years ended December 31 is as follows:

	For the years ended December 31,
	2022			2021
Provision for income taxes at U.S. Federal statutory rate	$	(6,664	)	$	(9,110	)
State taxes, net of federal benefit		(3,958	)		(10	)
Foreign taxes at different rate		730			869
Non-deductible expenses		47			12
Valuation allowance		16,382			9,645
Other		(475	)		(82	)
Share Based Compensation		145			130
Deferred True-up		(3,473	)		–
Credits		(742	)		–
	$	1,992		$	1,454

Deferred income taxes reflect the net tax effects of loss carry forwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Presented below are the significant components of the Group’s deferred tax assets and liabilities for federal, state and foreign income taxes at December 31:

	As of December 31,
	2022			2021
Deferred tax assets:
Net operating loss carry forwards	$	97,622		$	86,624
Impairment of property and equipment, and project assets		86			541
Temporary differences due to accrued warranty costs		83			103
Investment in subsidiaries		3,777			4,459
Credits		1,246			16
Allowance for bad debts		2,021			2,076
Fair value adjustment arising from subsidiaries acquisition		26			30
Stock compensation		2,790			1,861
Unrealized loss on derivatives		5,918			5,095
Unrealized investment loss		3,963			3,407
Other temporary differences		11,101			7,726
Valuation allowance		(128,152	)		(111,770	)
Total deferred tax assets		479			168
Deferred tax liabilities:
Fair value adjustment arising from subsidiaries acquisition		(2,673	)		(2,970	)
Total deferred tax liabilities		(2,673	)		(2,970	)
Net deferred tax liabilities	$	(2,194	)	$	(2,802	)

As of December 31, 2022, the Group had a net operating loss carry forward for federal income tax purposes of approximately $396,601. Of the federal net operating loss carryforwards, $86,156 begin to expire from the year 2027 to 2037. The remaining $310,445 of federal net operating loss carryforwards, which are limited to 80% of taxable income rather than the historical 100%, do not expire. The Group had total state net operating loss carryforwards of approximately $181,865, which will begin to expire in the year 2026 to 2042. The Group has foreign net operating loss carryforwards of $17,743. The Group has a federal R&D credit of $758, which will begin to expire from the year 2041 to 2042. The Group has a California R&D credit of $488, which will never expire.

Utilization of the federal and state net operating losses may be subject to certain annual limitations under IRC Section 382 due to the “change in ownership” provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization. The Group has a full valuation allowance against US federal and state net operating losses.

The Group recognizes deferred tax assets if it is more likely than not that those deferred tax assets will be realized. Management reviews deferred tax assets periodically for recoverability and makes estimates and judgments regarding the expected geographic sources of taxable income in assessing the need for a valuation allowance to reduce deferred tax assets to their estimated realizable value. Realization of the Group’s deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Because of the Group’s lack of earnings history, the net deferred tax assets have been fully offset by a valuation allowance in the U.S. The valuation allowance increased by $13,915 and $9,645 during the years ended December 31, 2022 and 2021, respectively.

The Group had no unrecognized tax benefits as of December 31, 2022 and 2021, respectively. The Group currently files income tax returns in the U.S., as well as California, Hawaii, New Jersey, and certain other foreign jurisdictions. The Group is currently not the subject of any income tax examinations. The Group’s tax returns generally remain open for tax years after 2012.

The Coronavirus Aid, Relief and Economy Security (CARES) Act (“the CARES Act, H.R. 748”) was signed into law on 27 March 2020. The CARES Act temporarily eliminates the 80% taxable income limitation (as enacted under the Tax Cuts and Jobs Act of 2017) for NOL deductions for 2018-2020 tax years and reinstated NOL carrybacks for the 2018-2020 tax years. Moreover, the CARES Act also temporarily increases the business interest deduction limitations from 30% to 50% of adjusted taxable income for the 2019 and 2020 taxable year. Lastly, the Tax Act technical correction classifies qualified improvement property as 15-year recovery period, allowing the bonus depreciation deduction to be claimed for such property retroactively as if it was included in the Tax Act at the time of enactment.

The Tax Cuts and Jobs Act included a sunset provision such that Research and Experimental Expenses incurred after December 31, 2021 are capitalized and amortized. US R&E expenses are amortized over five years and non-US R&E expenses are amortized over fifteen years. As part of the December 31, 2022 tax provision calculation, the Group added back to taxable income, research expenditures of $1,472. These expenses were incurred in the U.S. and amortized over 5 years for U.S. tax purposes.