Annual report pursuant to Section 13 and 15(d)


12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
The Company recorded provisions for income taxes of $5.9 million and $16.2 million for the years ended December 31, 2022 and 2021, respectively. At December 31, 2022 and 2021, the Company’s cumulative federal net operating losses were $39.2 million and $24.0 million, respectively. The provision recorded in the year ended December 31, 2022 was due in part to the impact of Section 280E of the Internal Revenue Code, which prohibits the deduction certain ordinary business expenses, and true-ups from changes that occurred between when the provision for the year ended December 31, 2021 was determined and when the related tax return was filed.

Reconciliations of the Company’s effective tax rates and the statutory tax rate for the years ended December 31, 2022 and 2021 were as follows:
Year ended December 31,
2022 2021
U.S federal taxes at the statutory rate 21.0  % 21.0  %
State taxes net of federal benefit 12.8  % 16.5  %
Section 280E adjustment 11.6  % 14.7  %
Stock-based compensation 2.2  % 10.5  %
FIN 48 reserve 19.5  % —  %
Return to Provision adjustments (48.7) % (19.8) %
Other 8.2  % 0.9  %
Valuation allowance 2.0  % 19.5  %
    Effective tax rate 28.6  % 63.3  %
The income tax effect of the Company’s loss carryforwards and temporary differences at December 31, 2022 and 2021 were as follows:
Year ended December 31,
2022 2021
Deferred tax assets:
Net operating loss carryforwards $ 6,947  6,981 
Allowance for doubtful accounts 256  11,810 
Stock compensation 2,557  2,557 
Loss on equity investments 8,602  8,633 
Goodwill write-offs 1,188  1,263 
Change in fair value of investments 616  599 
Lease payments 525  171 
Reserves 225  148 
   Other 95  — 
Deferred tax liabilities:
Depreciation (4,758) (2,520)
Real estate revenue (500) (1,000)
Net deferred tax asset 15,753  28,642 
Valuation allowance (15,753) (28,642)
      Total $ —  $ — 

Federal net operating losses carry forward indefinitely, subject to an annual limitation of 80% of taxable income, while state net operating losses expire at various dates beginning in 2031. These tax attributes are subject to an annual limitation from equity shifts, which constitute a change of ownership as defined under Internal Revenue Code Section 382. The Company recorded valuation allowances against its net deferred tax assets at December 31, 2022 and 2021 due to the uncertainty regarding the realization of such assets. The Company’s assessment of the realization of its deferred tax assets in future periods may differ due to changing circumstances.

The Company's gross unrecognized tax benefits for the years ended December 31, 2022 and 2021 were as follows (in thousands):
Year ended December 31,
2022 2021
Balance at January 1, $ —  $ — 
Additions based on tax positions related to prior years 4,014  — 
Balance at December 31, $ 4,014  $ — 

All of the unrecognized tax benefits are included as a component of Income taxes payable, which is a current liability. The Company does not expect its unrecognized tax benefits to change significantly over the next twelve months. During the year ended December 2022, the Company's unrecognized tax benefits increased by $4.0 million as a result of uncertain tax positions relating to net operating losses deducted by subsidiaries that are subject to the provision of Section 280E of the Internal Revenue Code. The Company believes that its reserves for uncertain tax positions are appropriate, and that it has meritorious defenses for its tax filings and will vigorously defend them during any audit process, appellate process and through litigation in courts, as necessary.

The Company files income tax returns in the U.S. federal tax jurisdiction and various state jurisdictions. The Company is currently open to examination under the statute of limitations by the Internal Revenue Service and state jurisdictions for the tax years ended 2018 through 2022.

At December 31, 2022, the Company recorded a receivable for income taxes of $3.1 million, comprised of $1.3 million of overpayments that will be applied to future periods and $1.8 million that was requested for refund from the Internal Revenue Service. This receivable is reported as a component of Other current assets in the Company's consolidated balance sheet at December 31, 2022.