Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of our provision from income taxes is as follows:

	Year Ended December 31,
	2021		2020		2019
Current:
Federal	$	6,912	$	10,140	$	6,689
State	785		2,059		844
	$	7,697	$	12,199	$	7,533
Deferred:
Federal	(3,030)		(1,227)		392
State	(588)		(284)		(240)
	$	(3,618)	$	(1,511)	$	152
Provision for income taxes	$	4,079	$	10,688	$	7,685

The reconciliation of the statutory U.S. Federal income tax rate to the Company's effective income tax rate is as follows;

	Year Ended December 31,
	2021		2020		2019
U.S. Federal statutory tax rate	21	%	21	%	21	%
State income taxes, net of federal benefit	(1)	%	6	%	2	%
Tax effect on stock option exercises, net of forfeitures	(44)	%	4	%	1	%
R&D tax credits and Orphan Drug credits	31	%	(2)	%	(2)	%
Limitation on executive compensation	(60)	%	9	%	10	%
Change in valuation allowance	(40)	%	9	%	4	%
Foreign rate differential	4	%	(1)	%	(2)	%
Other	(1)	%	1	%	1	%
Effective tax rate	(90)	%	47	%	35	%

    

The effective tax rate for the year ended December 31, 2021, reflects certain non-deductible executive compensation, tax effect on stock option exercises, net of forfeitures and valuation allowance established on the deferred tax asset for an unrealized capital loss in our investment in Tyme partially offset by credits for research and development activities.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets were as follows:

	December 31,
	2021		2020
Deferred tax assets
Net operating loss carryforward	$	1,563	$	841
Stock based compensation	10,405		12,015
Other asset - equity investment with readily determined fair value	3,190		1,771
Inventories	2,123		2,338
Employee-related expenses	1,240		51
Intangible assets	4,207		708
Right-of-use liability	962		1,154
R&D tax credit carryforwards	329		86
Other	1,489		1,216
Total deferred tax assets	25,508		20,180
Deferred tax liabilities
Installment sale - Malta	485		483
Prepaid expenses	45		43
Fixed assets	300		315
Lease liability	921		1,092
Total deferred tax liabilities	1,751		1,933
Valuation allowance	(4,959)		(3,067)
Net deferred tax assets	$	18,798	$	15,180

In July 2006, the Financial Accounting Standards Board (“FASB”) issued ASC 740-10, Uncertainty in Income Taxes, which defines the threshold for recognizing the benefits of tax-return positions in the financial statements as “more-likely-than-not” to be sustained by the taxing authorities. This statement also requires explicit disclosure requirements about a Company’s uncertainties related to their income tax position, including a detailed roll forward of tax benefits taken that do not qualify for financial statement recognition.

The Company files income tax returns in the U.S. federal jurisdiction and several states. The Company is under audit by the Internal Revenue Service and three states tax jurisdiction as of December 31, 2021. The Company has no amount recorded for any unrecognized tax benefits as of December 31, 2021. The Company regularly evaluates its tax positions for additional unrecognized tax benefits and associated interest and penalties, if applicable. There are many factors that are considered when evaluating these tax positions including: interpretation of tax laws, recent tax litigation on a position, past audit or examination history, and subjective estimates and assumptions.

As of December 31, 2021, the Company has a net operating loss ("NOL") carryforward in Malta of $4.5 million which has no expiration date and can be carried forward indefinitely until utilized.