XML 38 R22.htm IDEA: XBRL DOCUMENT v3.24.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
For the years ended December 31, 2023, 2022, and 2021, our income tax provision was calculated based on income before income taxes as follows (in thousands):
 202320222021
United States$844,002 $523,273 $497,421 
Foreign28,851 35,477 31,882 
 $872,853 $558,750 $529,303 
Foreign income for each of the years ended December 31, 2023, 2022, and 2021 was predominantly earned in the United Kingdom.
The income tax provision for the years ended December 31, 2023, 2022, and 2021 consisted of the following (in thousands):
 202320222021
Current provision:   
Federal$187,463 $100,707 $95,782 
State and local62,316 36,547 35,883 
Foreign6,396 4,891 4,420 
 256,175 142,145 136,085 
Deferred (benefit) provision
(16,651)10,483 9,517 
 $239,524 $152,628 $145,602 
NOTE 11 - INCOME TAXES (Continued)
For the year ended December 31, 2023, our income tax provision was $239.5 million compared to $152.6 million for the year ended December 31, 2022 and $145.6 million for the year ended December 31, 2021. The increase in the income tax provision year-over-year was primarily due to increased income before income taxes.
The income tax rates on income before income taxes for the years ended December 31, 2023, 2022, and 2021, were 27.5%, 27.3%, and 27.5%, respectively.
Items accounting for the differences between income taxes computed at the federal statutory rate and the income tax provision for the years ended December 31, 2023, 2022, and 2021 were as follows (in thousands):
 202320222021
Federal income taxes at the statutory rate$183,230 $117,338 $111,118 
State and local income taxes, net of federal tax benefits46,752 29,519 31,257 
Permanent differences9,513 5,261 5,316 
Foreign income taxes (including UK statutory rate changes)640 (155)(2,241)
Other(611)665 152 
 $239,524 $152,628 $145,602 
As of December 31, 2023, we had undistributed foreign earnings from certain foreign subsidiaries of approximately $167.3 million. Based on our evaluation, and given that a significant portion of such earnings were subject to tax in prior periods, or are indefinitely reinvested, we have concluded that any taxes associated with the repatriation of such foreign earnings would be immaterial. As of December 31, 2023, the amount of cash held by these foreign subsidiaries was approximately $135.0 million which, if repatriated, should not result in any material federal or state income taxes.
We file a consolidated federal income tax return including all of our U.S. subsidiaries with the Internal Revenue Service. We additionally file income tax returns with various state, local, and foreign tax agencies. Our income tax returns are subject to audit by various taxing authorities and are currently under examination for the years 2017 through 2021.
On March 11, 2021, the American Rescue Plan Act was signed into law. Such act includes certain tax provisions that could have an impact on the Company in future periods, including expanded limits on compensation deductions under Section 162(m) of the Internal Revenue Code for tax years beginning after December 31, 2026. We are currently evaluating the impact that this act may have on our financial position and/or results of operations; however, we anticipate that the expanded provisions of Section 162(m) will result in an increase in our effective income tax rate for years beginning after December 31, 2026.
On August 16, 2022, the Inflation Reduction Act of 2022 (the “Inflation Reduction Act”) was signed into law. For tax years beginning after December 31, 2022, the Inflation Reduction Act creates a 15% corporate alternative minimum tax on profits of corporations whose average annual adjusted financial statement income exceeds $1.0 billion for any consecutive three-tax-year period preceding the then current tax year. Based on our average annual income for the preceding three years, which was below the aforementioned $1.0 billion threshold, as well as the fact that our effective federal income tax rate is in excess of the 15% alternative minimum tax rate, this alternative minimum tax did not have an impact on our financial position and/or results of operations for the year ended December 31, 2023.
Legislation has been enacted in the United Kingdom to implement measures in concert with the Base Erosion and Profit Shifting Pillar Two framework for international taxation developed by the member countries of the Organization for Economic Co-operation and Development (the “Pillar Two Model Rules”). The Pillar Two Model Rules are intended to ensure that multinational enterprises pay a minimum 15% effective tax rate in every jurisdiction in which they operate. Given that our effective income tax rate in all jurisdictions in which we operate is in excess of such 15% minimum rate, we do not anticipate that these rules will have a material effect on our tax provision or effective income tax rate; however, we continue to monitor evolving tax legislation in the jurisdictions in which we operate.
NOTE 11 - INCOME TAXES (Continued)
Deferred income tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement and income tax bases of assets and liabilities. The deferred income tax assets and deferred income tax liabilities recorded as of December 31, 2023 and 2022 were as follows (in thousands):
 December 31, 2023December 31, 2022
Deferred income tax assets:  
Excess of amounts expensed for financial statement purposes over amounts deducted for income tax purposes:
Insurance liabilities$59,667 $57,278 
Operating lease liabilities92,410 78,391 
Deferred compensation54,313 40,682 
Other (including liabilities and reserves)40,110 35,584 
Total deferred income tax assets246,500 211,935 
Valuation allowance for deferred tax assets(4,385)(3,580)
Net deferred income tax assets242,115 208,355 
Deferred income tax liabilities:  
Costs capitalized for financial statement purposes and deducted for income tax purposes:  
Goodwill and identifiable intangible assets(165,073)(153,767)
Operating lease right-of-use assets(85,883)(73,134)
Depreciation of property, plant, and equipment
(30,075)(28,435)
Pension asset(4,660)(4,082)
Other(13,063)(10,500)
Total deferred income tax liabilities(298,754)(269,918)
Net deferred income tax liabilities$(56,639)$(61,563)
Our net deferred income tax liabilities of $56.6 million and $61.6 million as of December 31, 2023 and 2022, respectively, were included in “Other long-term obligations” in the accompanying Consolidated Balance Sheet.
Valuation allowances are established when necessary to reduce deferred income tax assets when it is more likely than not that a tax benefit will not be realized. As of December 31, 2023 and 2022, the total valuation allowance on deferred income tax assets, related to state and local net operating losses, foreign net operating losses, and foreign income tax credit carryovers, was approximately $4.4 million and $3.6 million, respectively. The increase in our valuation allowances at December 31, 2023 was a result of the recognition of additional deferred tax assets related to net operating loss carryovers and foreign income tax credit carryovers that we determined we would likely not be able to utilize.
Realization of our deferred income tax assets is dependent on our generating sufficient taxable income in the jurisdictions in which such deferred tax assets will reverse. Although realization is not assured, based on current projections of future taxable income, we believe it is more likely than not that the deferred income tax assets, net of the valuation allowances discussed above, will be realized. However, revisions to our forecasts or declining macroeconomic conditions could result in changes to our assessment of the realization of these deferred income tax assets.