Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 14 —Income Taxes

The components of income (loss) before income taxes for the years ended December 31, 2019, 2020 and 2021 are as follows (in thousands):

	2019		2020		2021
U.S.	$	14,981	$	(11,216)	$	(93,117)
Foreign		(864)		(4)		(919)
Total income (loss) before income taxes	$	14,117	$	(11,220)	$	(94,036)

The provision for income taxes for the years ended December 31, 2019, 2020 and 2021 consists of the following (in thousands):

	2019		2020		2021
Current:
State	$	116	$	80	$	54
Foreign		4		109		(4)
Total current		120		189		50
Deferred:
Federal		293		48		18
State		445		72		51
Total deferred		738		120		69
Total expense	$	858	$	309	$	119

Income tax expense (benefit) for the years ended December 31, 2019, 2020 and 2021 computed using the federal income tax rate of 21% as of December 31, 2019, 2020 and 2021 consists of the following (in thousands):

	2019		2020		2021
Computed expected tax (benefit)	$	2,964	$	(2,356)	$	(19,747)
Nondeductible expenses		3,087		2,775		617
Tax rate differential on foreign earnings		245		(144)		189
Joint ventures		3,745		(5,059)		(2)
Amazon warrants		—		—		3,707
Tax credits		(10,314)		(4,037)		(5,299)
Other		665		1,559		1,463
Change in valuation allowance		466		7,571		19,191
Total tax expense	$	858	$	309	$	119

On December 20, 2019, AFTC was retroactively extended beginning January 1, 2018 through December 31, 2020. As a result, all AFTC revenue for vehicle fuel the Company sold in the 2018 and 2019 calendar year was recognized during the year ended December 31, 2019. AFTC revenues for vehicle fuel the Company sold in the 2020 and 2021 calendar year were recognized during the year ended December 31, 2020 and 2021, respectively. AFTC for vehicle fuel sales expired on December 31, 2021, and it is not known whether or when AFTC will be reinstated for vehicle fuel sales made after December 31, 2021.

The Company recorded a federal tax benefit of $10.5 million, $4.2 million and $4.9 million related to the exclusion of AFTC associated with 2019, 2020 and 2021 fuel sales in excess of its fuel tax obligation, respectively. These amounts increased the Company’s deferred tax asset and the Company’s deferred tax asset valuation allowance.

Deferred tax assets and liabilities result from differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The tax effect of temporary differences that give rise to deferred tax assets and liabilities as of December 31, 2020 and 2021 are as follows (in thousands):

	2020		2021
Deferred tax assets:
Accrued expenses	$	4,940	$	5,379
Lease obligations		6,938		11,388
Alternative minimum tax and general business credits		6,233		6,787
Stock option expense		6,648		7,214
Amazon warrants		—		16,026
Other		1,545		3,167
Depreciation and amortization		1,635		2,582
Loss carryforwards		119,708		128,514
Total deferred tax assets		147,647		181,057
Less valuation allowance		(134,974)		(162,018)
Net deferred tax assets		12,673		19,039
Deferred tax liabilities:
Right-of-use assets		(6,788)		(11,266)
Commodity swap contracts		(1,596)		(649)
Goodwill		(2,221)		(2,534)
Investments in joint ventures and partnerships		(2,926)		(5,517)
Total deferred tax liabilities		(13,531)		(19,966)
Net deferred tax liabilities	$	(858)	$	(927)

As of December 31, 2021, the Company had federal, state and foreign net operating loss carryforwards of approximately $500.1 million, $370.9 million and $2.7 million, respectively. The Company’s federal, state and foreign net operating loss carryforwards will, if not utilized, expire beginning in 2026, 2022 and 2030, respectively. The Company also has federal tax credit carryforwards of $6.8 million that will expire beginning in 2026. Due to the change of ownership provisions of Internal Revenue Code Section 382, utilization of a portion of the Company’s net operating loss and tax credit carryforwards may be limited in future periods.

In assessing the realizability of the net deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers projected future taxable income and tax planning strategies in making this assessment. As of December 31, 2020 and 2021, the Company provided a valuation allowance of $135.0 million and $162.0 million, respectively, to reduce the net deferred tax assets due to uncertainty surrounding the realizability of these assets. The increase in the valuation allowance for the year ended December 31, 2021 of $27.0 million was primarily attributable to an increase in losses without benefit.

For the year ended December 31, 2021, the Company did not have any offshore earnings of certain non-U.S. subsidiaries which are permanently reinvested outside the United States.

The Company does not recognize the impact of a tax position in its financial statements unless the position is more likely than not to be sustained, based on the technical merits of the position. The Company has unrecognized tax benefits of $50.6 million as of December 31, 2021 that, if recognized, would not result in a tax benefit since it would be fully offset with a valuation allowance.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the years ended December 31, 2019, 2020 and 2021 (in thousands):

Unrecognized tax benefit—December 31, 2019	$	41,475
Gross increases—tax positions in current year		2,954
Gross increases—tax positions in prior year		870
Unrecognized tax benefit—December 31, 2020		45,299
Gross increases—tax positions in current year		3,508
Gross increases—tax positions in prior year		2,142
Gross decreases—tax positions in prior year		(364)
Unrecognized tax benefit—December 31, 2021	$	50,585

The increase in the Company’s unrecognized tax benefits in the years ended December 31, 2020 is primarily attributable to the portion of AFTC offset by the fuel tax the Company collected from its customers. The increase in the Company’s unrecognized tax benefits in the years ended December 31, 2021 is primarily attributable to the warrants issued to its customer and the portion of AFTC offset by the fuel tax the Company collected from its customers.

ASC 740, Income Taxes, requires the Company to accrue interest and penalties where there is an underpayment of taxes based on the Company’s best estimate of the amount ultimately to be paid. The Company’s policy is to recognize interest accrued related to unrecognized tax benefits and penalties as income tax expense. The Company recognized interest and penalties related to uncertain tax positions of $0.0 million for each of the years ended December 31, 2019, 2020 and 2021.

The Company is subject to taxation in the United States and various states and foreign jurisdictions. The Company’s tax years for 2018 through 2021 are subject to examination by various tax authorities. Although the Company is no longer subject to U.S. examination for years before 2018, and for state tax examinations for years before 2017, taxing authorities can adjust the net operating losses that arose in earlier years if and when the net operating losses reduce future income. In addition, the Company is required to indemnify SAFE&CEC S.r.l. for taxes that are imposed on CEC for pre-contribution tax periods.

A number of years may elapse before an uncertain tax position is finally resolved. It is often difficult to predict the final outcome or the timing of resolution of an uncertain tax position, but the Company believes that its reserves for income taxes reflect the most probable outcomes. The Company adjusts the reserve, as well as the related interest and penalties, in light of changing facts and circumstances. The amount of penalties accrued is immaterial. Settlement of any particular position would usually require the use of cash and result in the reduction of the related reserve, or there could be a change in the amount of the Company’s net operating loss. The resolution of a matter would be recognized as an adjustment to the provision for income taxes at the effective tax rate in the period of resolution. The Company does not expect a significant increase or decrease in its uncertain tax positions within the next twelve months.