Income Taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Income tax provision	$	(4,134)		$	(3,582)		$	(8,615)		$	(17,184)
Effective tax rate	44		%	(61)		%	44		%	33		%

For interim periods, we recognize an income tax provision based on our estimated annual effective tax rate expected for the entire year plus the effects of certain discrete items occurring in the quarter. The interim annual estimated effective tax rate is based on the statutory tax rates then in effect, as adjusted for changes in estimated permanent differences, and certain discrete items whose tax effect, when material, is recognized in the interim period in which they occur.

The effective tax rate for the three and six months ended June 30, 2023, reflects an interim tax provision resulting from the impact of certain non-deductible executive compensation and the impact of a valuation allowance recorded against the tax losses of Acacia, partially offset by credits for research and development activity.

The effective tax rate for the three and six months ended June 30, 2022, reflects an interim tax provision resulting from impact of certain non-deductible executive compensation and the impact of certain non-deductible costs from the acquisition of Acacia, partially offset by credits for research and development activity.

We review the realizability of our deferred tax assets on a quarterly basis, or whenever events or changes in circumstances indicate that a review is required. In determining the requirement for a valuation allowance, the historical and projected financial results of the legal entity or consolidated group recording the net deferred tax asset are considered, along with any other positive or negative evidence. Since future financial results may differ from previous estimates, periodic adjustments to our valuation allowances may be necessary.

Deferred income tax assets as of June 30, 2023 consisted of temporary differences primarily related to the net operating losses of Acacia, stock-based compensation and capitalized research and development expenses, partially offset by the temporary differences related to intangible assets and valuation allowance of Acacia.

We file income tax returns in the U.S. federal jurisdiction and several states. We are currently under audit by the Internal Revenue Service (IRS) and three state tax jurisdictions. We had no amount recorded for any unrecognized tax benefits as of June 30, 2023. We regularly evaluate our 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. We reflect interest and penalties attributable to income taxes, to the extent they arise, as a component of income tax provision or benefit.