INCOME TAXES |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| INCOME TAXES |
NOTE 16. INCOME TAXES
The Company’s provision for income taxes for the three months ended June 30, 2026 was $15,000, resulting in an effective tax rate of (5.1)%, compared with (1.6)% for the same period in the prior year. The change in the effective tax rate was primarily driven by state taxes. Additionally, the Company’s provision for income taxes for the six months ended June 30, 2026 was $15,000, resulting in an effective tax rate of (0.6)%, compared with (0.8)% for the same period in the prior year. Similarly, the small change in the effective tax rate was primarily driven by state taxes. The effective tax rate for the three and six months ended June 30, 2026 was lower than the U.S. statutory rate primarily due to the Company’s full valuation allowance position. The Company records income taxes using the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax effects attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and operating loss and tax credit carryforwards. The Company establishes a valuation allowance if management believes it is more likely than not that the deferred tax assets will not be recovered based on an evaluation of objective verifiable evidence. Management has considered the Company’s history of book and tax income and losses incurred since inception, and the other positive and negative evidence, and has concluded that it is more likely than not that the Company will not realize the benefits of the net deferred tax assets as of June 30, 2026. As of June 30, 2026, the Company had no unrecognized tax benefits and does not anticipate any significant change to the unrecognized tax benefit balance. |
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