Annual report pursuant to Section 13 and 15(d)

Income Taxes

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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income (loss) from continuing operations before income taxes consisted of the following:
Year Ended December 31,
2021 2020 2019
United States
 $ (245) $ 8,360  $ 589 
Foreign
 (4,994) 13,295  1,865 
Income (loss) from continuing operations before income taxes
 $ (5,239) $ 21,655  $ 2,454 
The components of the provision for income taxes consisted of the following:
Year Ended December 31,
2021 2020 2019
Current:
Federal
 $ 2,631  $ 2,108  $ 257 
State
 733  310  47 
Foreign
 7,828  7,099  2,642 
Total
 11,192  9,517  2,946 
Deferred:
Federal
 (579) 117  105 
State
 (42) (17) (1)
Foreign
 (9,719) (2,767) (2,038)
Total (10,340) (2,667) (1,934)
Income tax expense
 $ 852  $ 6,850  $ 1,012 
The provision for income taxes differs from the tax computed using the statutory U.S. federal income tax rate of 21% as a result of the following items:
Year Ended December 31,
2021 2020 2019
Tax expense (benefit) at U.S. statutory rate
 $ (1,100) $ 4,548  $ 515 
State income taxes, net of federal income tax benefit
 546  246  36 
Permanent differences
 1,121  467  2,802 
Foreign tax rate differential
 (886) 1,536  210 
Transaction costs
 (477) —  — 
Equity-based compensation
 1,689  —  — 
Other
 (41) 53  (2,551)
Income tax expense $ 852  $ 6,850  $ 1,012 
The foreign tax rate differential relates to differences between the income tax rates in effect in the foreign countries in which the Company operates, in particular Australia where the corporate tax rate is 30%.
The components of net deferred tax assets (liabilities) were as follows:
Year Ended December 31,
2021 2020
Deferred tax assets:
Transaction costs $ 2,129  $ 466 
Property and equipment
 439  — 
Accruals and reserves 4,397  1,962 
Lease liabilities 7,005  894 
State taxes —  64 
Inventory
 1,653  — 
Foreign exchange gains / losses 92  373 
Net operating loss carryforwards —  135 
Subtotal 15,715  3,894 
Less: Valuation allowance —  (144)
Total deferred tax assets 15,715  3,750 
Deferred tax liabilities:
Property and equipment
 —  (439)
Intangible assets (11,557) (8,378)
Right-of-use assets
 (7,041) (745)
Inventory —  (70)
Other (37) (22)
Total deferred tax liabilities (18,635) (9,654)
Net deferred liabilities $ (2,920) $ (5,904)
As of December 31, 2021, the Company did not have any federal or state net operating loss carryforwards. The Company has recorded no valuation allowance as of December 31, 2021 but had recorded a valuation allowance of $0.1 million as of December 31, 2020, primarily related to U.S. net operating loss carryforwards.
The Company had gross deferred tax assets of $15.7 million and $3.9 million and gross deferred tax liabilities of $18.6 million and $9.7 million at December 31, 2021 and 2020, respectively. Management has determined the gross deferred tax assets are more likely than not realizable.
The Company has not provided deferred taxes on unremitted earnings attributable to foreign subsidiaries that have been considered permanently reinvested. As of December 31, 2021, the unremitted earnings from these operations were approximately $11.4 million.
As of December 31, 2021 and 2020, the Company had no uncertain tax positions.
The Company is subject to taxation in the United States, Cayman Islands and Australia. For U.S. federal income tax purposes, 2018 and later tax years remain open for examination by the tax authorities under the normal three-year statute of limitations. For major U.S. states, 2017 and later tax years remain open for examination by the tax authorities under a four-year statute of limitations. For Australia, 2017 and subsequent tax years remain subject to examination.
Tax Contingencies
The Company is subject to income taxes in the United States and Australia. Significant judgment is required in evaluating the Company’s tax positions and determining the provision for income taxes. During the ordinary course of business, the Company considers tax positions for which the ultimate tax determination is uncertain for the purpose of determining whether a reserve is required, despite the Company’s belief that the tax positions are fully supportable. To date the Company has not established a reserve provision because the Company believes that all tax positions are highly certain.