9. Income Taxes

The components of the provision for income taxes are comprised of the following for the years ended December 31:

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Income tax results differed from the amount computed by applying the U.S. statutory income tax rate to income before income taxes (“IBIT”) for the following reasons for the years ended December 31:

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      (1) State taxes in Texas made up the majority (greater than 50 percent) of the tax effect in this category.

The 2025 columns of the table above were prepared in accordance with the updated requirements of ASU 2023-09, Improvements to Income Tax Disclosures.  See Note 1 – Organization and Nature of Operations, Basis of Presentation, and Summary of Significant Accounting Policies for additional details on the adoption of this new accounting standard.

Income tax expense (benefit) was ($6.1) million, $21.4 million and $51.1 million for the years ended December 31, 2025, 2024 and 2023, respectively. The effective tax rate for the years ended December 31, 2025, 2024, and 2023 was 14.2%, 23.1% and 22.7%, respectively. The fluctuation in the rate for the years ended December 31, 2025, 2024 and 2023, respectively, results primarily from the relationship of year-to-date income before income tax, the fluctuation in the permanent add-back related to the change in fair value of warrant liabilities on the Company’s warrants, the impact of state tax expense based off of gross receipts, and a compensation deduction limitation during each of the years ended December 31, 2025, 2024 and 2023.  

Deferred Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases, as well as from net operating losses and carryforwards.

Summary of tax accounts on the Consolidated Balance Sheets is as follows:

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Significant components of the deferred tax assets and liabilities for the Company are as follows:

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Income taxes paid, net of refunds received, consisted of the following:

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Tax loss carryovers for domestic income tax purposes totaled approximately $16.2 million at December 31, 2025. Under currently enacted tax laws, these tax carryovers are not subject to expiration. Tax loss carryovers for foreign income tax purposes totaled approximately $11.2 million at December 31, 2025 as shown in the below table. Approximately $11.2 million of these foreign income tax loss carryovers expire between 2031 and 2045. Realization is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards. A valuation allowance has been established against the deferred tax assets to the extent it is not more likely than not they will be realized.

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Unrecognized Tax Positions

No amounts have been accrued for uncertain tax positions as of December 31, 2025 and 2024. However, management's conclusion regarding uncertain tax positions may be subject to review and adjustment at a later date based on ongoing analyses of tax laws, regulations, and interpretations thereof and other factors. The Company does not have any unrecognized tax benefits as of December 31, 2025 and 2024 and does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months. Additionally, no interest or penalty related to uncertain taxes has been recognized in the accompanying consolidated financial statements.

The Company is subject to taxation in US, Canada, Mexico and state jurisdictions. The Company’s tax returns are subject to examination by the applicable tax authorities prior to the expiration of the statute of limitations for assessing additional taxes, which generally ranges from two to five years. Therefore, as of December 31, 2025, tax years for 2018 through 2025 generally remain subject to examination by the tax authorities. In addition, in the case of certain tax jurisdictions in which the Company has loss carryforwards, the tax authority may examine the amount of the tax loss carryforward based on when the loss is utilized rather than when it arises.