Income Taxes

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

9. Income Taxes

For the three and nine months ended September 30, 2022, we recorded income tax expense of $167 and $167, respectively. There was no income tax expense for the three and nine months ended September 30, 2021. The increase in tax for the three and nine months ended September 30, 2022 when compared to the three and nine months ended September 30, 2021, is primarily attributable to state tax and the change in pre-tax earnings by a subsidiary during the comparable periods. Our future effective tax rate may vary from the statutory tax rate primarily due to changes in our valuation allowance, state taxes, and the mix of pre-tax earnings in our subsidiaries.

We have cumulative net operating losses ("NOLs") as of September 30, 2022 and December 31, 2021. Given the history of losses, and after consideration for the risk associated with estimates of future taxable income, we established a full valuation allowance against net deferred tax assets at September 30, 2022 and 2021. Under the Tax Cuts and Jobs Act (“TCJA”), federal NOLs generated after 2017 will be carried forward indefinitely but are limited to an 80% deduction of taxable income. NOLs generated prior to 2018 have a 20-year carryforward period and can be used to offset 100% of taxable income . An exception to the TCJA federal NOL rule applies to certain of our subsidiaries and requires all NOLs generated from those entities to have a 20-year carryforward period and offset 100% of taxable income.

An “ownership change” as defined under Section 382 of the Internal Revenue Code ("IRC"), could potentially limit the ability to utilize certain tax attributes including the Company’s substantial NOLs. Ownership change is generally defined as any significant change in ownership of more than 50% of its stock over a three-year testing period. If, as a result of current or future transactions involving our common stock, we undergo cumulative ownership changes which exceed 50% over a testing period, our ability to utilize our NOL carryforwards would be subject to additional limitations under IRC Section 382. We continue to monitor changes in ownership with respect to these income tax provisions.