General form of registration statement for all companies including face-amount certificate companies

Income Tax

v3.21.2
Income Tax
 12 Months Ended
Dec. 31, 2020
Income Tax
13.
Income Taxes
The Company’s consolidated effective income tax rate from continuing operations for the years ended December 31, 2020 and 2019 was 0.0%. The Company’s provision for income taxes from continuing operations for the years ended December 31, 2020 and 2019 is as follows:
 
    
Year Ended December 31,
  
    
     2020     
     
     2019     
  
    
(in thousands)
  
Current:
                  
Federal
    $ —        $ —    
State
      —          —    
    
 
 
     
 
 
  
Total current
      —          —    
    
 
 
     
 
 
  
Deferred:
    $ —        $ —    
Federal
      —          —    
State
      —          —    
    
 
 
     
 
 
  
Total deferred
    $ —        $ —    
    
 
 
     
 
 
  
Total provision for income taxes
    $ —        $ —    
    
 
 
     
 
 
  
The Company’s operations are domestically located and therefore, the Company is not subject to tax in foreign jurisdictions. The provision (benefit) for income taxes differed from the amount computed by applying the federal statutory income tax rate of 21% to income (loss) before income taxes due to the following items for the years ended December 31, 2020 and 2019:
 
     Years Ended December 31,  
         2020              2019      
    
(in thousands)
  
Tax benefit at federal statutory rate
    $ (10,022 )     $ (12,572 ) 
Non-deductible
compensation
      449        777  
State tax, net of federal benefit
      (499 )       (345 ) 
Valuation allowance
      9,666        11,674  
Other
      406        466  
    
 
 
     
 
 
  
Income tax (benefit) expense
    $ —        $ —    
    
 
 
     
 
 
  
The income tax expense as of December 31, 2020 and December 31, 2019 was $0.0 million. The tax benefits associated with losses generated by the consolidated group have been reduced by a full valuation allowance as the Company does not believe it is
more-likely-than-not
that the losses will be utilized.
 
Deferred tax assets and liabilities as of December 31, 2020 and 2019, consisted of the following:
 
    
December 31,
  
    
2020
     
2019
  
    
(in thousands)
  
Deferred tax assets:
      
Net operating loss carryforwards
    $ 24,764    $ 28,450
Sec. 163(j) carryforward
      4,661      2,780
Accruals and reserves
      2,155      6,592
Deferred revenue
      539      147
Capital loss carryforward
      3,368      —    
Other deferred tax assets
      1,284      1,101
Revenue reserve
      —          1,061
  
 
 
     
 
 
  
Total deferred tax assets
      36,771      40,131
Valuation allowance
      (35,874 )       (38,873 ) 
  
 
 
     
 
 
  
Total net deferred tax assets
    $ 897    $ 1,258
  
 
 
     
 
 
  
Deferred tax liabilities
      
Basis difference in intangibles
      (895 )       (1,215 ) 
Other deferred tax liabilities
      (2 )       (43 ) 
  
 
 
     
 
 
  
Total deferred tax liabilities
      (897 )       (1,258 ) 
  
 
 
     
 
 
  
Net deferred tax liabilities
    $ —    $ —
  
 
 
     
 
 
  
The Company continues to provide for a full valuation allowance on its net deferred tax assets as the Company does not believe it is
more-likely-than-not
that the losses will be utilized after evaluation of all significant positive and negative evidence including, but not limited to, historical cumulative loss over the prior three-year period, as adjusted for permanent items, insufficient sources of taxable income in prior carryback periods and unavailability of prudent and feasible
tax-planning
strategies.
Below is a summary of the Company’s estimated loss and tax credit carryforwards. The Company’s tax attributes are subject to limitations on utilization due to historic ownership changes and may be subject to future limitations upon subsequent change of control, as defined by the Internal Revenue Code Sections 382 and 383.
 
    
Tax Effected
     
Expiration
  
    
(in thousands)
         
Federal net operating loss (“NOL”) carryforward
    $ 24,621     
2033-2060
  
Federal capital loss carryforward
      3,368      2025  
State NOL carryforwards
      143      2037-2040  
At December 31, 2020 and 2019 the Company had $117.2 million and $134.6 million of net operating loss (“NOL”) carryforwards for U.S. federal tax purposes, respectively. U.S. federal tax NOL carryforwards generated prior to 2018 of $35.0 million will expire, if unused, between 2033-2037. Under the Tax Cuts and Jobs Act of 2017, as modified by the Coronavirus Aid, Relief, and Economic Security Act, federal NOL carryforwards generated in tax years beginning after December 31, 2017 may be carried forward indefinitely. As of December 31, 2020, the Company had $82.3 million of NOL carryforwards generated after 2017 for U.S. federal tax purposes, which may be used to offset 80% of its taxable income annually. The Company files income tax returns in the United States federal jurisdiction and various state jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities. Tax years 2014-2020 remain open for examination.
 
Below is a tabular reconciliation of the total amounts of unrecognized tax benefits:
 
    
2020
     
2019
  
Unrecognized tax benefits—January 1
    $ 4,840    $ 6,842
Gross decrease—tax positions in current period
      (4,840 )       (2,002 ) 
  
 
 
     
 
 
  
Unrecognized tax benefits—December 31
    $ —    $ 4,840
  
 
 
     
 
 
  
Included in the balance of unrecognized tax benefits as of December 31, 2020 and 2019, are $0.0 million and $4.8 million, respectively, of tax benefits that, if recognized, would not affect our effective tax rate and would result in adjustments to other tax accounts, primarily deferred tax assets and the net operating loss carry forward.