Income Taxes

9 Months Ended

Sep. 30, 2024

Income Taxes

Income Taxes

12.  Income Taxes.

For the three and nine months ended September 30, 2024, the Company recorded an income tax benefit of 33.5% and 26.6%, respectively on loss from continuing operations. The rates differ from the federal statutory rate of 21% due to state taxes of 4.7%, valuation allowance change of 9.3% and nondeductible transaction costs and other permanent items of (8.4)%. For the three and nine months ended September 30, 2023, the Company recorded an income tax expense of 0.6% and 0.1% on loss from continuing operations before income taxes. The rate differs from the federal statutory rate of 21% due to state taxes of 3.5%, valuation allowance change of (24.5)% and other permanent items of 0.1%.

For the three and nine months ended September 30, 2024, the Company recorded an income tax benefit of $736,000 and $1,284,000 on the loss from continuing operations before income taxes. The overall benefit of $1,284,000 includes a $451,000 benefit for the reversal of the valuation allowance on federal deferred tax assets. During the three months ended March 31, 2024, the Company established deferred tax liabilities related to the acquisition in the majority ownership of Bloomia. The Company anticipates that the deferred tax liabilities will result in future taxable income that will allow for the realization of the federal deferred tax assets.

As of September 30, 2024, and December 31, 2023, the Company had unrecognized tax benefits totaling $35,000 and $42,000, respectively, including interest, which relates to state nexus issues. The amount of the unrecognized tax benefits, if recognized, that would affect the effective income tax rates of future periods is $35,000.