Income Taxes |
6 Months Ended |
|---|---|
Jun. 30, 2026 | |
| Income Taxes [Abstract] | |
| INCOME TAXES | NOTE 15 – INCOME TAXES
The effective tax rate was 0% for the three and six months ended June 30, 2026 and 2025, due primarily to the full valuation allowance on deferred tax assets and other discrete items.
At December 31, 2025, we had federal and state net operating losses (“NOLs”) in the amount of approximately $71.0 million and $57.4 million. While the federal NOLs carryforward indefinitely, the Tax Cuts & Jobs Act of 2017 limits the amount of federal net operating loss utilized each year after December 31, 2020 to 80% of taxable income. The state NOLs begin to expire in 2031.
Income tax expense is recorded using the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between amounts reported for income tax purposes and financial statement purposes, using current tax rates. A valuation allowance is recognized if it is anticipated that some or all of a deferred tax asset will not be realized. We must assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent that we believe that recovery is not likely, it must establish a valuation allowance. Significant management judgment is required in determining the provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets.
At June 30, 2026 and 2025, there were $0 unrecognized tax benefits that if recognized would affect the annual effective tax rate.
We and our subsidiaries’ income tax returns since 2022 remain subject to examination by tax jurisdictions.
In July 2025, the President of the United States signed into law budget reconciliation bill H.R.1, commonly referred to as the One Big Beautiful Bill Act (“OBBBA”) introducing tax reform measures that included changes to tax deductions for businesses, international tax rules, and foreign tax credit limitations that become effective in 2025 and 2026. As of enactment, these changes did not materially affect our deferred tax assets and liabilities or related valuation allowances. The impact on our income tax expense, effective income tax rate and cash tax payments for the year ended December 31, 2025 was not material. We will continue to evaluate the full impact of the legislation as additional guidance becomes available. |