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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of the Company’s income tax provision (benefit) are as follows (in thousands):
 Year Ended December 31,
 202320222021
Current:   
Federal$— $— $(119)
State17 (202)262 
Total current provision (benefit)17 (202)143 
Deferred:   
Federal— (2,046)43 
State— (312)20 
Total deferred provision (benefit)— (2,358)63 
Total income tax provision (benefit)$17 $(2,560)$206 
The 2023 income tax expense of less than $0.1 million reflects state income taxes.

The 2022 income tax benefit of $2.6 million primarily reflects the release of valuation allowance resulting from net deferred tax liabilities recorded in Digital Motors acquisition accounting providing a source of income in assessing realization of consolidated net deferred tax assets.

The 2021 income tax expense of $0.2 million primarily reflects state income taxes and the amortization of tax-deductible goodwill that is not an available source of income to realize deferred tax assets.

The overall effective income tax rate differs from the statutory federal rate as follows:
 Year Ended December 31,
 202320222021
Income tax benefit based on the federal statutory rate21.0 %21.0 %21.0 %
State income taxes, net of federal benefit3.3 1.8 4.4 
Nondeductible expenses(1.3)(0.3)3.2 
Change in valuation allowance(20.8)(12.7)2.4 
Stock-based compensation(6.0)(1.3)(8.6)
Research and development tax credits— — (20.1)
Uncertain tax positions— 0.6 (2.8)
Goodwill impairment— (7.0)— 
Other
3.8 — — 
Overall effective income tax rate— %2.1 %(0.5)%
The components of deferred tax assets (liabilities) are as follows (in thousands):
 December 31,
 20232022
Deferred income tax assets:  
Net operating loss carryforwards$87,872 $80,688 
Stock-based compensation4,666 6,827 
Accrued expenses1,417 1,303 
Research and development tax credits6,558 6,558 
Operating leases liabilities3,432 5,457 
Intangible assets and goodwill3,663 2,953 
Property, equipment and software5,323 1,104 
Capitalized research and development costs9,711 8,792 
Other547 652 
Gross deferred tax assets123,189 114,334 
Valuation allowance(120,197)(109,876)
Net deferred tax assets2,992 4,458 
Deferred tax liabilities:  
Capitalized commissions(533)(365)
Operating lease assets(2,459)(4,093)
Gross deferred tax liabilities(2,992)(4,458)
Total net deferred tax assets (liabilities)$— $— 
 
At December 31, 2023, the Company had federal and state net operating loss carryforwards of $338.5 million and $260.9 million, respectively. Of the Company’s federal net operating loss carryforwards, $248.2 million will begin to expire in 2034 and $90.3 million does not expire. The Company’s state net operating loss carryforwards began to expire in 2022. At December 31, 2023, the Company had federal and state research and development tax credit carryforwards of approximately $1.1 million and $11.2 million, respectively. The federal tax credit carryforwards begin to expire in the year ending December 31, 2040. The state tax credit carryforwards can be carried forward indefinitely. Utilization of the Company’s net operating loss and tax credit carryforwards may be subject to annual limitations arising from ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such annual limitations could result in the expiration of the net operating loss and tax credit carryforwards before their utilization.

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2023. Such objective evidence limits the ability to consider other subjective evidence such as its projections for future growth. On the basis of this evaluation, at December 31, 2023, a valuation allowance of $120.2 million has been recorded since it is more likely than not that the deferred tax assets will not be realized.

The change in the valuation allowance for the years ended December 31, 2023, 2022, and 2021 is as follows (in thousands):
 Year Ended December 31,
 202320222021
Valuation allowance, at beginning of year$109,876 $94,117 $95,042 
Increase in valuation allowance10,321 15,759 — 
Decrease in valuation allowance— — (925)
Valuation allowance, at end of year$120,197 $109,876 $94,117 
The $10.3 million increase in valuation allowance is primarily related to the increase in deferred tax assets for net operating loss carryforwards and property, equipment, and software.
The following is a reconciliation of the total amounts of unrecognized tax benefits (in thousands):
 Year Ended December 31,
 202320222021
Unrecognized tax benefit, beginning of year$4,570 $5,237 $7,640 
Increase (decrease) based on tax positions in prior period— (1,101)(3,504)
Increase based on tax positions in current period— 434 1,101 
Unrecognized tax benefit, end of year$4,570 $4,570 $5,237 
The December 31, 2023 balance includes $0.3 million, that, if recognized would affect the effective income tax rate. The December 31, 2023, 2022, and 2021 balances include tax benefits of $3.4 million, $3.4 million, and $3.3 million, respectively, which if recognized, would be in the form of net operating loss or tax credit carryforwards and expected to require a full valuation allowance based on present circumstances. These amounts are net of offsetting benefits from other tax jurisdictions.

The Company’s policy is to recognize interest and penalties related to uncertain tax positions, if any, in the income tax provision. At December 31, 2023, no interest and penalties related to uncertain tax positions have been accrued.

The Company is subject to United States federal and state taxation. Due to the presence of net operating loss carryforwards, all income tax years remain open for examination by the Internal Revenue Service and various state taxing authorities. The Company is not currently under Internal Revenue Service or state tax examination.