Company: NEGG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001213900-25-036055
Chunk: 195

Company: Newegg Commerce, Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 18
Chunk 195
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 11.17  
  Change in valuation allowance – Foreign                                   1.99         3.18         0.96  
  Change in uncertainty tax position (“ FIN48”)                             0.51       ( 2.54       ( 0.10  
  Other                                                                   ( 0.94       ( 0.86       ( 0.01  
  Effective tax rate                                                        2.87         4.35      ( 32.08  

The significant items that caused the
effective tax rate change related to stock based compensation and the changes in valuation allowance.

Uncertain Tax Positions

As of the end of fiscal year 2024,
the total liability for income tax associated with unrecognized tax benefits was $4.2million. The Company’s effective tax rate
will be affected by any portion of this liability we may recognize. The Company does not believe it is reasonably possible that any of
the uncertain tax benefits will be recognized in the next 12 months. As such, all uncertain tax positions, including accrued interest,
have been classified as long-term taxes payable on the consolidated balance sheets.

A reconciliation of the beginning and
ending amounts of uncertain tax positions is as follows (in thousands):

                                                                                                   Year ended                                    
                                                                                                   December 31,                                  
                                                                                                   2024                         2023             
 ─────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────
  Beginning balance                                                                                $                 4,242      $         1,606  
  Additions based on tax positions related to the prior year                                                         101                  2,592  
  Additions based on tax positions related to the current year                                                       —                      126  
  Reduction based on tax position related to settlements with taxing authorities                                     ( 105                 ( 62  
  Reductions based on tax position related to a lapse of the applicable statute of limitation                        —                     ( 20  
  Ending balance                                                                                   $                 4,238      $         4,242  

F-22

The Company’s continuing practice
is to recognize interest and penalties related to unrecognized tax benefits as tax expense. As of December 31, 2024 and 2023, interest
and penalties related to uncertain tax positions were not material.

The Company files a consolidated federal
income tax return in the United States, as well as combined and separate U. S. state income tax returns. Certain subsidiaries
of the Company are subject to income tax in China, Taiwan, Hong