Income Taxes

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 8 – INCOME TAXES

A reconciliation of the Company’s statutory rate to the effective tax rate for the three and nine months ended September 30, 2024 and 2023 is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Statutory tax rate		21.0	%		21.0	%		21.0	%		21.0	%
State taxes, net of federal benefit		6.0	%		5.8	%		6.0	%		5.8	%
Executive compensation		1.6	%		1.4	%		1.6	%		1.4	%
Corporate-owned life insurance		(0.5	%)		(0.2	%)		(0.5	%)		(0.2	%)
Other permanent differences		0.4	%		0.4	%		0.4	%		0.3	%
Prior year tax adjustments		(11.0	%)		(27.1	%)		(3.7	%)		(10.8	%)
Worthless stock		—			(20.2	%)		—			(7.3	%)
Capital loss		—			—			—			(6.7	%)
Valuation allowance		0.9	%		3.1	%		1.0	%		1.9	%
Equity-based compensation		(0.3	%)		(0.6	%)		(1.7	%)		(1.6	%)
Uncertain tax position		4.2	%		19.1	%		4.4	%		6.9	%
Tax credits		(8.5	%)		(1.3	%)		(8.5	%)		(1.3	%)
Effective tax rate		13.8	%		1.4	%		20.0	%		9.4	%

The prior year tax adjustments, uncertain tax position and tax credits recognized during the three and nine months ended September 30, 2024 and 2023 are both primarily related to the Research & Experimentation (“R&E”) credits.

The Company’s effective income tax rate was higher for the three months and nine months ended September 30, 2024 as compared to the three months and nine months ended September 30, 2023 primarily due to restructuring of the ownership of the Company’s Canadian entities and the deduction for worthless stock related to the wind-down of the Company’s commercial marketing business in the United Kingdom (the “U.K.”) during the second and the third quarters of 2023, respectively, which reduced the Company’s 2023 effective tax rate.