Income Taxes

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 10. Income Taxes

Deferred Tax Asset and Valuation Allowance. The Company has concluded a valuation allowance is required against its deferred tax assets as of March 31, 2022. In reaching this conclusion, in accordance with U.S. GAAP, the Company has evaluated all available evidence, both positive and negative, and determined that the Company’s history of recent losses, primarily due to the goodwill and indefinite-lived intangible asset impairments, was sufficient significant negative evidence to require a valuation allowance. Therefore, the Company has recorded a valuation allowance to reduce its deferred tax assets as of March 31, 2022 to the amount that is more likely than not to be realized in future periods. At each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets.

Effective Tax Rate. The effective income tax rate, expressed by calculating the income tax (benefit) expense as a percentage of Income before income tax, was (138.6)% for the three months ended March 31, 2022, which varied from the statutory federal income tax rate

of 21%, primarily due to the benefit realized on stock-based compensation, the impact of uncertain tax positions and the tax benefits realized on a partial release of the valuation allowance.

(In thousands, except percentages)	Three Months Ended March 31, 2022
Income tax provision at statutory rate	$	382		21.0	%
State income taxes, net of federal income tax benefit		204		11.2
Stock-based compensation		(1,425	)	(78.3	)
Uncertain tax positions		(1,015	)	(55.8	)
Valuation allowance		(917	)	(50.4	)
Other, net		250		13.7
Income tax benefit	$	(2,521	)	(138.6	)%