Income Taxes

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

In January 2023 approximately $4.2 million of deferred tax liabilities were recognized on the acquisition of VIA as shown in the table in Note 5. The deferred tax liabilities recognized related primarily to intangible assets recognized for financial reporting purposes that are not recognized for income tax purposes. A significant portion of Ideanomics’ net deferred tax assets had previously been judged to be more likely that not to be unable to reduce the Company’s income tax liability and consequently were offset by a valuation allowance. Once the acquisition of VIA occurred, a portion of Ideanomics’ deferred tax assets could be utilized in offsetting the newly acquired deferred tax liabilities, this resulted in a one-time income tax benefit of approximately $2.4 million during the three months ended March 31, 2023.

In general, the Company has net operating loss carryovers creating deferred tax assets that, to the extent that they do not offset deferred tax liabilities, are reduced by a 100% valuation allowance. Certain deferred tax liabilities cannot be offset by deferred tax assets. These consist of state deferred tax liabilities of certain US subsidiaries that file separate state tax returns and of certain foreign subsidiaries. The Company also has certain deferred tax liabilities that can only be 80% offset by deferred tax assets relating to net operating loss carryovers that can only offset 80% of taxable income. During the three months ended March 31, 2023 there was an income tax benefit of approximately $3.0 million. This consisted principally of the approximately $2.4 million one-time benefit as discussed in the preceding paragraph plus approximately $0.6 million resulting from the amortization or impairment of intangible assets with carrying values in excess of their tax bases. The latter resulted in the reversal of related deferred tax liabilities. The income tax benefit was substantially all domestic.

In March 2022 approximately $4.7 million of deferred tax liabilities were recognized on the acquisition of Energica. These are included in “other liabilities” in the table in Note 5. During the three months ended March 31, 2022, there was an income tax benefit of approximately $0.4 million, this consisted principally of approximately $0.3 million state income tax benefits for US subsidiaries and approximately $0.1 million of foreign income tax benefits. The foreign income tax benefit for the three months ended March 31, 2023, consists primarily of the reversal of some of the Energica deferred tax liability as a result of Energica's losses.

At March 31, 2023 and December 31, 2022, the Company’s deferred tax assets do not include approximately $0.3 million of potential deferred tax assets, arising in 2021, not recognized because they do not meet the threshold for recognition. If these assets were to be recognized, they would be fully offset by a valuation allowance. Other than these, there were no uncertain tax positions that would prevent the Company from recording the related benefit as of March 31, 2023 and December 31, 2022.