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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
NOTE 15. Income Taxes
The Company applied the intra-period tax allocation rules to allocate income taxes between continuing operations, discontinued operations, and other comprehensive income as prescribed by U.S. GAAP, where the tax effect of income (loss) before income taxes is computed without regard to the tax effects of income (loss) before income taxes from the other categories. Income tax expense (benefit) from continuing operations consisted of the following (in thousands):
Year Ended December 31,
202420232022
Current:
Federal$(109)$119 $113 
State91 1,382 997 
Foreign1,254 893 — 
1,236 2,394 1,110 
Deferred:
Federal849 (1,070)288 
State(492)(399)242 
Foreign(142)(134)— 
215 (1,603)530 
Income tax expense (benefit)$1,451 $791 $1,640 
The principal items accounting for the difference between taxes computed at the U.S. statutory rate and taxes recorded consisted of the following (in thousands):
Year Ended December 31,
202420232022
Computed tax at U.S. federal statutory rate of 21%
$(52,253)$(40,837)$(19,041)
Increase (decrease) in taxes resulting from:
Foreign rate differential446 162 — 
State taxes, net of federal impact(404)713 723 
Stock-based compensation6,900 (6,366)(47,868)
Nondeductible compensation1,919 5,430 23,570 
Permanent differences101 424 (155)
Valuation allowance46,629 40,240 45,234 
Other, net(1,887)1,025 (823)
Income tax expense (benefit)$1,451 $791 $1,640 
The net deferred tax liability comprises the tax effect of temporary differences between U.S. GAAP and tax reporting related to the recognition of income and expenses. The net deferred income tax liabilities are included in other liabilities in the consolidated balance sheets. Components of the net deferred tax liability consisted of the following (in thousands):
December 31,
20242023
Deferred income tax assets:
Net operating and capital losses$404,964 $346,128 
State taxes— 270 
Accrued expenses20,692 11,526 
Transaction costs710 672 
Stock-based compensation14,329 14,575 
Lease liabilities2,703 3,319 
Interest limitation— 561 
Other, net3,856 2,163 
Total deferred income tax assets$447,254 $379,214 
Deferred income tax liabilities:
ROU assets$(2,606)$(3,238)
Intangible assets(3,114)(3,943)
Investments in marketable securities(1,603)(1,806)
Investments in partnerships and affiliates(12,985)(5,854)
Total deferred income tax liabilities$(20,308)$(14,841)
Valuation allowance(428,717)(365,932)
Net deferred income tax liabilities$(1,771)$(1,559)
The Company regularly reviews its deferred tax assets for recoverability and establishes a valuation allowance when it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. In making this assessment, the Company is required to consider all available positive and negative evidence to determine whether, based on such evidence, it is more likely than not that some portion or all of the net deferred tax assets will not be realized in future periods. As of December 31, 2024 and 2023, the Company believed that it is more likely than not that its deferred tax assets in excess of deferred tax liabilities will not be realized. Accordingly, the Company has provided a valuation allowance of $428.7 million and $365.9 million on the Company’s deferred tax assets as of December 31, 2024 and 2023, respectively. The increase in valuation allowance of $62.8 million recorded in current year activities is primarily
attributable to current year losses. The net deferred tax liability as of December 31, 2024 principally relates to deferred tax liabilities associated with long-term investments in partnerships and affiliates, which are expected to reverse against net operating losses which can only offset 80% of taxable income.
As of December 31, 2024, the Company has federal and state net operating losses of $1.7 billion and $1.1 billion, respectively. As of December 31, 2023, the Company has federal and state net operating losses of $1.5 billion and $854.4 million, respectively. As of December 31, 2024, $1.6 billion of the total federal net operating losses are carried forward as indefinite-lived net operating losses. The remaining net operating losses are carried forward and will expire beginning in 2027 if unutilized. Utilization of these operating loss carryforwards may be subject to an annual limitation based on changes in ownership, as defined by Section 382 of the Internal Revenue Code of 1986, as amended. As of December 31, 2024, $51.4 million and $52.1 million of the Company’s federal and state net operating loss carryforward, respectively, are attributable to prior acquisition transactions and are subject to Section 382 limitations. The Company’s analysis indicates that none of the acquired net operating loss carryforwards will expire unutilized solely as a result of the Section 382 limitations.
Unrecognized Tax Benefits
As of December 31, 2024, the Company had unrecognized tax benefits of $5.3 million, $1.0 million of which, if recognized, would impact its effective tax rate. As of December 31, 2023, the Company had unrecognized tax benefits of $5.5 million, $1.0 million of which, if recognized, would impact its effective tax rate. As of December 31, 2022, the Company had unrecognized tax benefits of $5.2 million, $0.9 million of which, if recognized, would impact its effective tax rate.
The following table summarizes the activity related to the Company’s unrecognized tax benefits (in thousands):
December 31,
202420232022
Balance at beginning of the year$5,471 $5,212 $5,919 
Additions related to current year acquisition— 722 — 
Additions related to current year192 79 35 
Additions (reductions) related to prior years— — (137)
Reductions related to settlements with taxing authorities(320)(542)(605)
Balance at end of the year$5,343 $5,471 $5,212 
As of December 31, 2024, the Company recorded a liability for unrecognized tax benefit of $1.0 million. As of December 31, 2023, the Company recorded a liability for unrecognized tax benefit of $1.4 million, inclusive of $0.8 million of accrued interest and penalties. As of December 31, 2022, the Company recorded a liability for unrecognized tax benefit of $1.6 million, inclusive of $0.7 million of accrued interest and penalties. As of December 31, 2024 and 2023, $4.3 million and $4.4 million of unrecognized benefits, respectively, were reflected as a reduction in deferred tax asset balances. During the year ended December 31, 2024, the Company reversed $0.3 million of tax liability, $0.2 million of accrued interest, and $0.1 million of penalties on unrecognized tax benefits due to payments of an amended state return related to the period ended June 30, 2016 and statute of limitation release on state return related to period ended June 30, 2015. During the year ended December 31, 2023, the Company reversed $0.5 million of tax liability, $0.2 million of accrued interest, and $0.2 million of penalties on unrecognized tax benefits due to payments of an amended state return related to the period ended June 30, 2016. During the year ended December 31, 2022, the Company reversed $0.6 million of tax liability and $0.1 million of accrued interest on unrecognized tax benefits due to payments of an amended state return related to the period ended June 30, 2016. It is reasonably possible that during the next 12 months the Company may realize a change in its liability for uncertain tax positions.
The Company operates in several taxing jurisdictions, including U.S. federal, multiple U.S. states, and foreign jurisdictions. The statute of limitations has expired for all tax years prior to 2021 for federal, prior to 2017 for various state tax purposes, and prior to 2019 for non-U.S. jurisdictions. However, the net operating loss generated on the Company’s federal and state tax returns in prior years may be subject to adjustments by the federal and state tax authorities.
For additional information regarding income taxes and unrecognized tax benefits related to discontinued operations, see Note 20.
As of December 31, 2024, the Company has unremitted earnings from subsidiaries outside of the U.S. on which no deferred tax liability has been recorded. The Company’s intention is to indefinitely reinvest these earnings outside the United States. Upon distribution of those earnings in the form of a dividend or otherwise, the Company would be subject to both state income taxes and withholding taxes payable to various foreign countries. The amounts of such tax liabilities that might be payable upon repatriation of foreign earnings are not material.
On October 8, 2021, the Organization for Economic Cooperation and Development (“OECD”) released the Pillar Two model rules introducing a 15% global minimum tax under the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting. In December 2022, the European Union (“EU”) Member States formally adopted the EU Pillar Two Framework (“Pillar Two Framework”). Certain countries have enacted this tax law change, with an effective date starting January 1, 2024 and January 1, 2025, for certain aspects of the directive. The Company considered the applicable tax law changes on Pillar Two implementation in the relevant countries, and concluded there was no material impact to its tax provision for 2024. The Company will continue to evaluate the impact of these tax law changes on future reporting periods.