Company: CPSS
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001683168-25-001548
Chunk: 1415

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 8
Chunk 1415
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     883 
  
    Other 
     185  
     – 
  
    Total deferred tax assets 
    $8,575  
    $6,115 

    Deferred Tax Liabilities: 

    Pension accrual 
    $(2,015) 
    $(1,217)
  
    Lease right-of-use assets 
     (5,301) 
     (803)
  
    Furniture and equipment and other 
     (249) 
     (359)
  
    Total deferred tax liabilities 
     (7,565) 
     (2,379)
  
    Net deferred tax asset 
    $1,010  
    $3,736 

     F-28 

CONSUMER PORTFOLIO SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We acquired certain net operating
losses and built-in loss assets as part of our acquisitions of MFN Financial Corp. (“MFN”) in 2002 and TFC Enterprises, Inc.
(“TFC”) in 2003. Moreover, both MFN and TFC have undergone an ownership change for purposes of Internal Revenue Code (“IRC”)
Section 382. In general, IRC Section 382 imposes an annual limitation on the ability of a loss corporation (that is, a corporation with
a net operating loss (“NOL”) carryforward, credit carryforward, or certain built-in losses (“BILs”)) to utilize
its pre-change NOL carryforwards or BILs to offset taxable income arising after an ownership change.

In determining the possible
future realization of deferred tax assets, we have considered future taxable income from the following sources: (a) reversal of taxable
temporary differences; and (b) tax planning strategies that, if necessary, would be implemented to accelerate taxable income into years
in which net operating losses might otherwise expire.

Deferred tax assets are recognized
subject to management’s judgment that realization is more likely than not. A valuation allowance is recognized for a deferred tax
asset if, based on the weight of the available evidence, it is more likely than not that some portion of the deferred tax asset will not
be realized. In making such judgements, significant weight is given to evidence that can be objectively verified. Although realization
is not assured, we believe that the realization of the recognized net deferred tax asset of $1.0 million as of December 31,