Note 9 - Income Taxes

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Income Tax Disclosure [Text Block]

9.         Income Taxes

The provision for income tax (benefit) expense is as follows for the years ended December 31, 2024 and December 31, 2023 (in thousands):

	For the Year			For the Year
	Ended			Ended
	December 31, 2024			December 31, 2023
Current:
Federal	$	-		$	-
State		(18	)		45
Total current tax expense		(18	)		45
Deferred:
Federal		-			-
State		-			-
Total deferred tax expense		-			-
Income tax expense	$	(18	)	$	45

A reconciliation of the income tax provision to that computed by applying the statutory federal income tax rate to the income before provision for income taxes is as follows for the years ended December 31, 2024 and December 31, 2023 (in thousands):

	For the Year			For the Year
	Ended			Ended
	December 31, 2024			December 31, 2023
Tax computed at statutory rate	$	(56	)	$	(191	)
State income taxes, net of federal benefit		(159	)		45
Permanent differences		-			4
Excluded entities		157			(75	)
Prior period accrual adjustment		-			(598	)
Change in valuation allowance		40			878
Other		-			(18	)
Income tax (benefit) expense	$	(18	)	$	45

The components of the Company's net deferred tax asset (liability) at December 31, 2024 and 2023 follows (in thousands):

	At			At
	December 31, 2024			December 31, 2023
Deferred tax assets:
Equity method investment	$	560		$	448
Goodwill		-			916
Right of use asset		52			148
Other accrued expenses		12			22
Notes receivable fair value adjustment		-			708
Capital loss carryforward		12			11
Bad debt expense		9			-
Net operating loss		9,232			7,582
Impairment loss		256			-
Gross deferred tax assets		10,133			9,835
Deferred tax liabilities:
Property, plant, and equipment		(1	)		(24	)
Non-taxable dividends		(730	)		(664	)
Lease liability		(52	)		(150	)
Gain on remeasurement of acquisition		(843	)		(847	)
Pass-through activity		(212	)		-
Other		(14	)		-
Gross deferred tax liabilities		(1,852	)		(1,685	)
Valuation allowance		(8,281	)		(8,150	)
Net deferred tax assets (liability)	$	-		$	-

The Company has U.S. federal net operating loss carryforwards of approximately $35.5 million which are available to reduce future taxable income. The federal net operating loss carryforwards will begin expiring in 2033. We have combined state net operating loss carryforwards of $56.7 million that will expire at various times beginning in 2033.

During 2024 and 2023, we recorded a non-cash credit to our valuation allowance of approximately $131,000 and $709,000, respectively, against our deferred tax assets. The primary assets which are covered by this valuation allowance are employee benefits and net operating losses in excess of the amounts which can be carried back to prior periods. The valuation allowance was calculated in accordance with the provisions of ASC Topic 740, Income Taxes, which requires an assessment of both positive and negative evidence when measuring the need for a valuation allowance. Our results over the most recent years were heavily affected by challenging conditions within the real estate market. Our cumulative loss during recent years represents sufficient negative evidence to require a valuation allowance. We intend to maintain a valuation allowance until sufficient positive evidence exists to support its reversal, resulting in no deferred tax asset balance being recognized. Should we determine that we will not be able to realize all or part of our deferred tax asset in the future, an adjustment to the deferred tax asset will be charged to income in the period such determination is made.

The unrecognized tax benefits activity for the years ended  December 31, 2024 and 2023 follows (in thousands):

	For the Year		For the Year
	Ended		Ended
	December 31,		December 31,
	2024		2023
Unrecognized tax benefits balance at January 1	$	31	$	31
Gross decrease in tax positions of prior years		-		-
Unrecognized tax benefits balance at December 31	$	31	$	31

Total amount of unrecognized tax benefits that would affect our effective tax rate if recognized is $31,000 at both December 31, 2024 and 2023. The 2018 through 2023 tax years remain open to examination by major taxing jurisdictions.