Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v3.22.2.2
INCOME TAXES
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The provision for income taxes consists of the following:
Year Ended December 31,
2021 2020 2019
Current:
Federal $ 1,429  $ 1,537  $ 532 
State and Local 350  168  109 
Total Current Provision $ 1,779  $ 1,705  $ 641 
Deferred:
Federal $ —  $ —  $ — 
State and Local —  —  — 
Total Deferred Provision $ —  $ —  $ — 
Total Provision for Income Taxes $ 1,779  $ 1,705  $ 641 
The Company is subject to U.S. federal and state corporate income tax. As of December 31, 2021, the Company has a net operating loss carryforward of approximately $465.6 million that is available to offset future U.S. federal taxable income, if and when it arises. The Company has State net operating losses after apportionment and tax effect of approximately $47.8 million. The net operating loss carryforwards will begin to expire in 2029. A portion of the net operating loss carryforward may be limited in its use due to certain provisions of the Code, including, but not limited to Section 382, which imposes an annual limit on the amount of net operating loss and net capital loss carryforwards that the Company can use to offset future taxable income.

As of December 31, 2021, the Company has a capital loss carryforward of approximately $27.2 million. The capital loss carryforward will begin to expire in 2022.
The Company and its subsidiaries file U.S. federal and state income tax returns in various jurisdictions. Generally, the Company is no longer subject to tax examinations by tax authorities for years prior to 2018.

The Company has assessed its tax positions for all open years. As of December 31, 2021, the Company reported a total of $0.6 million of unrecognized tax benefits which, if recognized, would affect the Company’s effective tax rate. The Company does not believe that it is reasonably possible that the total amount of unrecognized tax benefits will significantly change within the next twelve months.
A reconciliation of the unrecognized tax benefits is as follows:
Balance as of December 31, 2020 $ 1,196 
Decrease due to expiration of statue of limitations (568)
Balance as of December 31, 2021 $ 628 
Generally, the Company’s effective tax rate differs from the federal statutory rate as a result of state and local taxes and changes in the valuation allowance.

The difference between the Company's reported provision for income taxes and the U.S. federal statutory rate of 21% is as follows:
December 31,
2021 2020 2019
Provision at the statutory rate 21.00  % 21.00  % 21.00  %
Permanent items (0.57) % (0.56) % (0.17) %
Excess Inclusion Income (7.39) % (2.80) % (0.45) %
State and local taxes (0.63) % (0.24) % (0.16) %
Valuation allowance (20.60) % (20.61) % (21.11) %
Unrecognized tax benefits 1.94  % (0.01) % (0.86) %
Other —  % 0.11  % 0.57  %
Total Benefit (Expense) (6.25) % (3.11) % (1.18) %

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of December 31, 2021 and 2020 are presented below:
December 31,
2021 2020
Deferred tax assets:
Allowance for loan losses $ 285  $ 283 
Depreciation and amortization 5,600  8,158 
Accrued expenses 878  2,956 
Interest 3,610  3,757 
Operating lease liabilities 57,002  59,804 
Net operating losses 142,875  126,163 
Capital losses 7,625  7,749 
Deferred revenue 3,804  1,956 
Investment in Partnership 5,245  5,330 
Impairment Loss 2,671  1,822 
Other 585  1,342 
Total deferred tax assets 230,180  219,320 
Less valuation allowance (169,675) (152,884)
Net deferred tax assets $ 60,505  $ 66,436 
Deferred tax liabilities:
Operating lease right-of-use assets 56,971  61,467 
Membership deposit liabilities 3,534  4,969 
Total deferred tax liabilities $ 60,505  $ 66,436 
Net deferred tax assets $ —  $ — 
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible.
As of December 31, 2021, the Company recorded a full valuation allowance against its net deferred tax assets as management does not believe that it is more likely than not that the net deferred tax assets will be realized.
The following table summarizes the change in the deferred tax asset valuation allowance:
Valuation allowance at December 31, 2020 $ 152,884 
Increase due to current year operations 16,791 
Valuation allowance at December 31, 2021 $ 169,675