INCOME TAXES

6 Months Ended

Jun. 30, 2021

INCOME TAXES

INCOME TAXES

5.    INCOME TAXES

The Company’s effective tax rate on the net income before income taxes was 24.6% and 26.0% for the three and six months ended June 30, 2021, respectively.  The Company’s effective tax rate on the net income before income taxes was (85.1)% and (74.8)% for the three and six months ended June 30, 2020, respectively.

A reconciliation of the federal statutory corporate tax rate to the Company’s effective tax rate is as follows:

	June 30, 2021		June 30, 2020
U.S. statutory federal tax rate	21.0	%	21.0	%
Valuation Allowance	—		(98.2)	%
PPP loan	(1.1)	%	—
State taxes	6.1	%	2.4	%
Effective tax rate	26.0	%	(74.8)	%

The Company uses the recognition and measurement provisions of the FASB ASC Topic 740, Income Taxes (“Topic 740”), to account for income taxes. The provisions of Topic 740 require a company to record a valuation allowance when the “more likely than not” criterion for realizing net deferred tax assets cannot be met. Furthermore, the weight given to the potential effect of such evidence should be commensurate with the extent to which it can be objectively verified. As a result, we reviewed the operating results, as well as all of the positive and negative evidence related to realization of such deferred tax assets to evaluate the need for a valuation allowance at June 30, 2021 and 2020.

The effective tax rate for the six months ended June 30, 2021 was different from the federal statutory rate due primarily to the apportionment of earnings across various state jurisdictions. The Company determined that no valuation allowance should be recorded at June 30, 2021.

The effective tax rate for the six months ended June 30, 2020 was different from the federal statutory rate due primarily to the release of the valuation allowance recorded on net operating losses in earlier periods.