Quarterly report pursuant to Section 13 or 15(d)

INCOME TAXES

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INCOME TAXES
 6 Months Ended
Jun. 30, 2022
INCOME TAXES  
INCOME TAXES

NOTE 19. INCOME TAXES

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, 2022.

For the three-month periods ended June 30, 2022 and 2021, the Company’s income tax benefit was 64,000 and $3.4 million, respectively, resulting in an effective tax rate of 0.85% and 23.68%, respectively. For the six-month period ended June 30, 2022 the Company’s income tax expense was $40,000, resulting in an effective income tax rate of (0.45)%. For the six-month period ended June 30, 20121 the Company’s income tax benefit was $3.3 million, resulting in an effective income tax rate of 23.61%. The change in effective tax rate for three and six-month periods ended June 30, 2022 and 2021, is due to changes in unfavorable permanent book-tax differences and valuation allowances.

As of June 30, 2022, the Company had no unrecognized tax benefits and does not anticipate any significant change to the unrecognized tax benefit balance.