Income Taxes |
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| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes | 10. Income Taxes Net income (loss) before income taxes is as follows for the periods indicated:
We file income tax returns in the United States, Canada, and various state and local jurisdictions. We believe that we have appropriate support for the income tax positions taken and to be taken on the Company's tax returns and that the accruals for tax liabilities are adequate for all open years based on our assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter. The Company's tax returns are open to audit under the statute of limitations for the years ending December 31, 2021 through December 31, 2025. The following tables present the Company’s current and deferred tax (benefit) expense for the periods indicated:
The following table presents the reconciliation of our income taxes calculated at the statutory federal tax rate to the income tax provision in our financial statements. Our effective tax rate for 2025 differs from the statutory rate primarily due to states taxes, foreign withholding taxes, and the recognition of a valuation allowance on our Canadian and Oklahoma state deferred tax assets.
*State taxes in made up the majority (greater than 50 percent) of the tax effect in this category. Our effective tax rate for 2024 differs from the statutory rate primarily due to states taxes, foreign withholding taxes, & the recognition of a valuation allowance on our Canadian and Oklahoma state deferred tax assets. Our effective tax rate for 2024, excluding the impact of Canadian loss net valuation allowance, is 25.48%.
Deferred income taxes primarily represent the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Net deferred tax liabilities consisted of the following at December 31, 2025 and 2024:
As of December 31, 2025, we have $1.4 million of U.S. federal net operating loss carry-forwards, all of which has an indefinite carryforward period but is limited to offset 80% of taxable income in any future year. We also have approximately $30.8 million of state net operating loss carry-forwards (tax-effected $0.6 million), of which $0.2 million expires in 2037 and the remaining can be carried forward indefinitely. These loss carryforwards may reduce future taxable income, however, the extent of which may be limited in the circumstances that an IRC Section 382 limitation would apply due to an ownership change. A state valuation allowance of $0.4 million is applicable to the net state deferred tax assets attributable to Oklahoma because of objective negative evidence on the cumulative loss incurred in the state over the three-year period ended December 31, 2025. As of December 31, 2025, we have $48.2 million (tax-effected 11.1 million) of Canadian net operating loss carry-forwards. A separate valuation allowance of $12.8 million attributable to Canadian net operating losses and other tax carryovers is recorded because it is more likely than not to be utilized. The Company does not have any material uncertain tax positions. The Company recognizes interest expense and penalties related to the uncertain tax position in the income tax expense line in the accompanying consolidated statements of operations and comprehensive loss. Accrued interest and penalties are included in other non-current liabilities in the consolidated balance sheet and were $0 as of December 31, 2025 and 2024. Total net income tax payments were $2.2 million for the year ended December 31, 2025. The following table lists the components of the payments for income taxes:
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