Climb Global Solutions Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes

Income Taxes

12 Months Ended

Dec. 31, 2023

7. Income Taxes

Deferred tax attributes resulting from differences between the tax basis of assets and liabilities and the reported amounts in the Consolidated Balance Sheets are as follows:


	December 31,		December 31,
	2023		2022
Deferred tax assets:
Accruals and reserves	$	574	$	631
Deferred rent credit		115		146
Depreciation and amortization		55		38
Total deferred tax assets		744		815
Deferred tax liabilities:
Depreciation and amortization		(5,974)		(4,604)
Total deferred tax liabilities		(5,974)		(4,604)
Net deferred tax (liabilities) asset	$	(5,230)	$	(3,789)

The provision for income taxes is as follows:


	Year ended December 31,
	2023			2022
Current:
Federal	$	2,793		$	2,694
State		676			622
Foreign		1,372			1,254
		4,841			4,570
Deferred:
Federal		32			(124)
State		10			(30)
Foreign		(425)			(381)
		(383)			(535)
	$	4,458		$	4,035
Effective Tax Rate		26.6	%		24.4	%

The reasons for the difference between total tax expense and the amount computed by applying the U.S. statutory federal income tax rate to income before income taxes are as follows:


	Year ended December 31,
	2023		2022
Statutory rate applied to pretax income	$	3,524	$	3,472
Other permanent items		569		156
State income taxes, net of federal income tax benefit		542		468
Acquisition related costs		132		—
Other items		—		11
Dividends		(3)		(9)
GILTI, net of foreign tax credits		(11)		(50)
Foreign income taxes (under) over U.S. statutory rate		(46)		137
Stock compensation		(249)		(150)
Income tax expense	$	4,458	$	4,035

The Company has analyzed filing positions in all the federal, state and foreign jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The Company has identified its federal

consolidated tax return, its state tax returns, its Canadian tax return and its tax return in the United Kingdom as major tax jurisdictions. As of December 31, 2023, the Company’s 2020 through 2022 Federal tax returns remain open for examination. The Company’s various states and Canadian tax returns are open for examination for the years 2019 through 2022. The Company’s tax return in the United Kingdom is open for examination for the years 2021 and 2022. The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. The Company believes that it has appropriate support for the income tax positions it takes and expects to take on its tax returns, and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including experience and interpretations of tax law applied to the facts of each matter.

For financial reporting purposes, income before income taxes includes the following components:


	Year ended December 31,
	2023		2022
United States	$	11,990	$	12,968
Foreign		4,791		3,564
	$	16,781	$	16,532

The Company has approximately $9.2 million of undistributed earnings in Canada and $5.3 million of undistributed earnings in the United Kingdom and $0.9 million of undistributed earnings in Ireland, which it continues to reinvest indefinitely, and therefore no withholding taxes related to its repatriation has been recorded.

There was no activity related to the Company’s unrecognized tax benefits during the year ended December 31, 2023 and December 31, 2022.

During the years ended December 31, 2023 and 2022, the Company incurred interest and penalties of zero, respectively, related to these uncertain tax benefits.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482603/740-30-50-2

+ Details