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INCOME TAXES
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
 
The domestic and foreign components of income (loss) before taxes for our operations consist of the following for the years ended December 31:
 202220212020
Domestic$(302)$(9,970)$(7,103)
Foreign23,511 7,416 5,143 
Total income (loss) before income taxes$23,209 $(2,554)$(1,960)
 
The components of the provision (benefit) for income taxes consist of the following for the years ended December 31:
 
 202220212020
Current – Federal$2,288 $(707)$162 
Current – State927 209 196 
Current – Foreign6,760 800 1,407 
Current income tax expense9,975 302 1,765 
Deferred – Federal(1,024)(1,386)(1,997)
Deferred – State(175)(996)156 
Deferred -– Foreign600 536 (472)
Deferred income tax benefit(599)(1,846)(2,313)
Income tax provision (benefit)$9,376 $(1,544)$(548)
 
Our deferred tax assets and liabilities consist of the following at December 31:
 
 20222021
Deferred tax assets:  
Net operating loss carryforward$6,565 $7,388 
Inventory differences965 805 
Equity compensation1,850 1,661 
Investment in joint venture1,658 187 
Restructuring201 196 
Purchased intangible assets and goodwill527 759 
Accrued employee compensation and benefits4,144 4,113 
Lease liabilities2,880 2,795 
Other, net786 826 
Gross deferred tax assets19,576 18,730 
Less valuation allowances(6,277)(6,640)
Total deferred tax assets13,299 12,090 
Deferred tax liabilities:
Depreciation and amortization(4,736)(4,466)
Right-of-use assets(2,633)(2,551)
Other, net(205)(345)
Total deferred tax liabilities(7,574)(7,362)
Net deferred tax assets$5,725 $4,728 

As of December 31, 2022, we had loss carryforwards for tax purposes totaling approximately $42,854, comprised of $38,404 foreign and $4,450 domestic state loss carryforwards, which will be available to offset future taxable income in certain jurisdictions. The significant majority of foreign losses can be carried forward indefinitely, while all other losses generally have carryforward periods of 5 to 20 years, depending on jurisdiction. We have analyzed the net operating losses and established valuation allowances on those where we have determined the realization is not more likely than not to occur.    

We assess the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use existing deferred tax assets. Additionally, a three-year cumulative loss at a Consolidated Financial Statement level may be viewed as negative evidence impacting a jurisdiction that by itself is not in a three-year cumulative loss position. We continue to record valuation allowances against deferred tax assets where we do not believe sufficient future taxable income will be generated. Changes in our valuation allowance in 2022 are primarily attributable to changes in currency revaluation and movements in the underlying deferred tax assets. In 2021, we recorded a net decrease of $1,926 in our valuation allowance,
primarily comprised of releases in the United States for state taxes and France due to a change in our estimates of future income in those jurisdictions, as well as remeasurement of our German valuation allowance due to a change in our German effective tax rate and currency revaluation. The amount of the deferred tax assets considered realizable can be adjusted in future periods if positive evidence such as current and expected future taxable income outweighs negative evidence.

A reconciliation of our income tax provision computed by applying the Federal statutory income tax rate of 21% to income before taxes is as follows for the years ended December 31:
 202220212020
Statutory U.S. federal income tax$4,874 $(536)$(412)
Foreign rate differential2,868 1,690 1,223 
Permanent items980 683 210 
U.S. state income tax, net of federal benefit569 (338)(24)
(Income) loss attributable to noncontrolling interest(333)170 — 
Equity compensation202 (1,476)(715)
Return to provision adjustments134 (345)(565)
Deemed repatriation of foreign earnings64 — — 
German legal entity structuring— — 1,161 
DynaEnergetics Siberia shut down— — 324 
Research credits— — (115)
Other(14)11 10 
Change in valuation allowances32 (1,403)(1,645)
Income tax provision (benefit)$9,376 $(1,544)$(548)

DMC files income tax returns in the U.S. federal jurisdiction, as well as various U.S. state and foreign jurisdictions. The Company is not currently under examination in any jurisdiction.

DMC’s U.S. federal tax returns are open for examination for the tax years 2018 onward. Most of DMC’s state tax returns remain open to examination for the tax years 2018 onward. DMC’s foreign tax returns generally remain open to examination for the tax years 2018 onward, depending on jurisdiction.
 
At December 31, 2022 and 2021, the balance of unrecognized tax benefits was $2,106 and zero, respectively. Included in the balance of unrecognized tax benefits as of December 31, 2022 are $1,835 of tax benefits that, if recognized, would affect the effective tax rate. We recognize interest and penalties related to uncertain tax positions in operating expense. As of December 31, 2022 and 2021, our accrual for interest and penalties related to uncertain tax positions was zero.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
2022
Unrecognized tax benefits, December 31, 2021
$— 
Additions based on tax positions related to the current year2,106 
Additions for tax positions of prior years— 
Reductions for tax positions of prior years— 
Settlements— 
Unrecognized tax benefits, December 31, 2022
$2,106 

The Tax Cuts and Jobs Act (“TCJA”), enacted in December 2017, provides that foreign earnings generally can be repatriated to the U.S. without federal tax consequence. We have reassessed the assertion that cumulative earnings by our foreign subsidiaries are indefinitely reinvested. We continue to permanently reinvest the earnings of our international subsidiaries and therefore we do not provide for U.S. income taxes or withholding taxes that could result from the distribution of those earnings to the U.S. parent. If any such earnings were ultimately distributed to the U.S. in the form of dividends or otherwise, or if the shares of our international subsidiaries were sold or transferred, we could be subject to additional U.S. federal and state income taxes. Due to the multiple avenues in which earnings can be repatriated, and because a large portion of these earnings are not liquid, it is not practical to estimate the amount of additional taxes that might be payable on these amounts of undistributed foreign income.