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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The provision (benefit) for income taxes consisted of the following (in thousands):
December 31,
2023		December 31,
2022
Current expense (benefit):
Federal$20,694 $9,655 
State5,001 4,844 
Foreign24 12 
Total25,719 14,511 
Deferred expense (benefit):  
Federal(21,454)(14,073)
State(4,088)(3,707)
Total(25,542)(17,780)
Provision (benefit) for income taxes$177 $(3,269)
The Company measures deferred tax assets and liabilities based on the difference between the financial statement and tax bases of assets and liabilities at the applicable tax rates. Components of the Company’s deferred tax asset and liability are as follows (in thousands):
December 31,
2023		December 31,
2022
Deferred tax assets:
Lease liabilities$12,119 $9,587 
Bad debt reserve608 593 
Accrued employee related expenses1,029 901 
Capitalized research and development costs37,957 18,670 
Restricted stock units3,052 1,701 
Performance stock units1,738 672 
Acquisition related transaction costs890 392 
Intangible asset amortization– 680 
Other2 2 
57,395 33,198 
Deferred tax liabilities:  
Fixed asset depreciation(4,833)(5,286)
Lease assets(10,387)(7,733)
Intangible asset amortization(1,775)– 
Prepaid expenses(1,102)(622)
Section 481(a) adjustment(3,343)(4,229)
Goodwill amortization(2,175)(1,569)
(23,615)(19,439)
Net deferred tax assets (liabilities)$33,780 $13,759 
Beginning January 1, 2022, the Tax Cuts and Jobs Act (TCJA) of 2017 eliminated the option to deduct research and development expenditures in the current year and now requires taxpayers to capitalize and amortize research and development costs pursuant to Internal Revenue Code Section 174. The capitalized expenses are amortized over a 5-year period for domestic expenses and a 15-year period for foreign expenses. As a result of this provision of the TCJA, deferred tax assets reflect approximately $105 million and $82 million of pre-tax capitalized and amortizable research and development costs for the years ended December 31, 2023 and 2022, respectively.
The Company’s tax attributes, including net operating losses and credits, are subject to any ownership changes as defined under the Internal Revenue Code Sections 382 and 383. A change in ownership could affect the Company’s ability to utilize its net operating losses and credits. The Company has recognized the portion of net operating losses and research and development credits acquired that will not be limited and more likely than not to be realized.
Based on the Company’s operating history and management’s expectation regarding future profitability, management believes the Company’s deferred tax assets are more likely than not to be realizable under ASC 740, Income Taxes. Accordingly, no valuation allowance exists as of December 31, 2023, and December 31, 2022.
Income tax expense (benefit) differed from the amounts computed by applying the federal statutory income tax rate of 21% to pretax income due to the following adjustments (in thousands):
December 31,
2023		December 31,
2022
Statutory rate$(1,354)$351 
State income taxes, net of federal benefit(138)225 
Section 162(m) compensation differences1,381 773 
Other permanent differences269 107 
Stock compensation(1,770)(1,348)
Foreign taxes24 12 
Other– 1 
Research & development credit(3,098)(3,664)
Uncertain tax positions4,863 274 
Provision (benefit) for income tax$177 $(3,269)
The adjustment to the statutory rate from state income taxes for the year ended December 31, 2023, and December 31, 2022, respectively, are the result of state and local income tax expense, including tax rate and apportionment factor changes.
The adjustment to the statutory rate from Internal Revenue Code Section 162(m) for the year ended December 31, 2023, and December 31, 2022, are the result of permanent differences created by the annual disallowance of certain executive compensation exceeding $1.0 million.

The adjustment to the statutory rate from stock compensation for the year ended December 31, 2023, and 2022, are the result of permanent differences recognized for the tax deduction in excess of book amortization on the exercise and vesting of stock-based compensation.
The adjustment to the statutory rate from research and development credits for the year ended December 31, 2023, and 2022 are the result of application of research and development tax credits earned generated by the Company in connection with certain at-risk work performed on behalf of our customers.
The Company has elected to record tax-related penalties and interest as current income tax expense. For the year ended December 31, 2023, total penalties and interest related to uncertain tax positions is $4.8 million, including $4.6 million related to IRC Section 174 research and development expenditures.
A reconciliation of the beginning balance and ending amounts of unrecognized tax benefits (excluding interest and penalties) is as follows for the year ended December 31, 2023, and 2022 (in thousands):
20232022
Balances at January 1$716 $2,269 
Additions based on tax positions related to the prior year14,485 396 
Decreases based on tax positions related to prior year– (1,960)
Additions based on tax positions related to the current year23,698 153 
Settlements– (142)
Balances at December 31$38,899 $716 
The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate at December 31, 2023, and December 31, 2022, is $0.9 million and $0.7 million, respectively.
The amount of the unrecognized tax benefits expected to reverse within the next 12 months is $9.5 million.

For the period ending December 31, 2023, the Company recorded interest and penalties of $0.6 million and $4.0 million, respectively, related to uncertain tax positions, which were recognized as a component of income tax expense. For the period ending December 31, 2022, the Company did not record any interest and penalties related to uncertain tax positions.
For the periods ending December 31, 2023, and December 31, 2022, the Company has an ending uncertain tax position of $38.0 million and $14.5 million, respectively, against its IRC Section 174 research and development expenditures. The Company reported this uncertain tax position given its position that its costs are deductible currently and therefore should not be capitalized and amortized over five years. This uncertain tax position represents a timing difference with no impact to overall income tax expense or benefit.
For the periods ending December 31, 2023, and December 31, 2022, the Company has an ending uncertain tax position of $0.6 million and $0.4 million, respectively, against its research and development expenditures credit.
For the period ending December 31, 2022, the Company submitted a Voluntary Disclosure Agreement to the state of Florida that was accepted in 2022, that resulted in a settlement and full release of the previously recorded uncertain tax position.
For the period ending December 31, 2022, the Company recorded an uncertain tax position of $1.9 million for employing on an impermissible method in deducting stock-based compensation expense for income tax purposes consistent with the timing as recognized for book purposes. The Company filed a Form 3115, Application for Change in Accounting Method, with the Internal Revenue Service requesting to change from the impermissible method to a permissible method, which was approved during 2022 and resulted in a reversal of the uncertain tax position to a deferred tax liability.
For the period ending December 31, 2022, the Company recorded an uncertain tax position of $0.4 million related to the annual limitation on the deductibility of executive compensation claimed on its 2021 U.S. federal income tax return, filed during 2022.
The Company files income tax returns in the U.S. federal jurisdiction and certain states in which it operates. The Company’s federal income tax returns for tax years 2020 and thereafter remain subject to examination by the U.S. Internal Revenue Service. The statute of limitations on the Company’s state income tax returns generally conforms to the federal three-year statute of limitations.
On March 27, 2020, the President of the United States signed into law the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company deferred employer payroll taxes under the CARES Act, which was satisfied in full during the period ending December 31, 2022, without impact to our income tax benefit.