Income Taxes |
9 Months Ended |
|---|---|
Sep. 30, 2024 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes |
13. Income Taxes
The Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes.
The Company records valuation allowances against its net deferred tax assets to the extent it determines it is more likely than not that such assets will not be realized in the future. The Company regularly evaluates the probability that its deferred tax assets will be realized and determines whether valuation allowances or adjustments thereto are needed. This determination involves judgement and the use of estimates and assumptions, including expectations of future taxable income and tax planning strategies. The Company applies judgment to consider the relative impact of negative and positive evidence, and the weight given to negative and positive evidence is commensurate with the extent to which such evidence can be objectively verified. Based on the Company’s evaluation of all available positive and negative evidence, and with greater weight placed on the objectively verifiable evidence which included the Company’s substantial losses incurred during the nine months ended September 30, 2024, the Company determined, at the end of the third quarter, that it is more likely than not that the Company’s net U.S. deferred tax assets will not be realized. As a result, the Company provided a full valuation allowance against its U.S. federal and state deferred tax assets resulting in a recorded income tax expense in the amount of approximately $6,417,000. The Company continues to maintain a valuation allowance against foreign tax attributes that may not be realized.
The Company had income tax expenses of $6,417,000 and $4,300,000 for the three and nine months ended September 30, 2024, respectively, and income tax expenses of $254,000 and $482,000 for the three and nine months ended September 30, 2023, respectively, for our continuing operations. The Company’s effective tax rates were approximately 268.6% and 36.6% for the three and nine months ended September 30, 2024, respectively, and 50.8% and 51.8% for the three and nine months ended September 30, 2023, respectively. The Company’s effective tax rates for the three and nine months ended September 30, 2024, were primarily impacted by the full valuation allowance on its deferred assets as discussed above.
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