Income Taxes

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income tax benefit for the three months ended March 31, 2023 was $3.7 million. Income tax expense for the three months ended March 31, 2022 was $2.6 million.

The effective tax rate for the three months ended March 31, 2023 is 14.1% , which is lower than the federal statutory rate of 21.0%, primarily due to the exclusion from taxable income of book income from the revaluation of warrant liabilities and adjustments for various non-deductible expenses for officer’s compensation and meals and entertainment.

The effective tax rate for the three months ended March 31, 2022 was 7.7% , which is lower than the federal statutory rate of 21.0%, primarily due to forecasted losses adjusted by various non-deductible expenses primarily from the revaluation of warrant liabilities, limitation of officer’s compensation, and meals and entertainment.

The Company has established a valuation allowance in the U.S. and Singapore against a portion of its remaining deferred tax assets because it is more likely than not that certain deferred tax assets will not be realized. In determining whether deferred tax assets are realizable, the Company considered numerous factors including historical profitability, the amount of future taxable income and the existence of taxable temporary differences that can be used to realize deferred tax assets.

Additionally, the Company applies ASC 740, the accounting standard addressing the accounting for uncertainty in income taxes that prescribes rules for recognition, measurement and classification in the financial statements of tax positions taken or expected to be taken in a tax return. The Company has gross unrecognized tax benefits of $0.9 million and $0.1 million for the three months ended March 31, 2023 and March 31, 2022, respectively.

The Inflation Reduction Act, signed into law on August 16, 2022, provides tax incentives for certain industries and imposes a 15% minimum tax on the book income of certain large corporations and a 1% excise tax on stock buybacks. The Company may be subject to the new excise tax on certain stock buybacks that occur after December 31, 2022. The Company does not anticipate a material impact from the Inflation Reduction Act on the Company's condensed consolidated financial statements.