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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income taxes | Income taxes Components of current and deferred income tax expense (benefit) are as follows ($000’s omitted):
| 2021 |  | 2020 |  | 2019
Current expense (benefit) |  |  |  |  |
Federal | $ | 430,686 |  |  | $ | 159,677 |  |  | $ | 196,186 |
State and other | 73,671 |  |  | 24,580 |  |  | 21,252 |
| $ | 504,357 |  |  | $ | 184,257 |  |  | $ | 217,438 |
Deferred expense (benefit) |  |  |  |  |
Federal | $ | 57,743 |  |  | $ | 116,484 |  |  | $ | 74,700 |
State and other | 1,425 |  |  | 21,114 |  |  | 30,738 |
| $ | 59,168 |  |  | $ | 137,598 |  |  | $ | 105,438 |
Income tax expense (benefit) | $ | 563,525 |  |  | $ | 321,855 |  |  | $ | 322,876 |
The following table reconciles the statutory federal income tax rate to the effective income tax rate:
| 2021 |  | 2020 |  | 2019
Income taxes at federal statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State and local income taxes, net of federal tax | 3.3 |  |  | 3.3 |  |  | 3.7 |
Federal tax credits | (1.2) |  |  | (4.8) |  |  | (0.2) |
Changes in tax laws, including the Tax Act | — |  |  | — |  |  | 0.2 |
Deferred tax asset valuation allowance | (0.8) |  |  | (0.8) |  |  | (0.4) |
Other | 0.2 |  |  | (0.1) |  |  | (0.2) |
Effective rate | 22.5 | % |  | 18.6 | % |  | 24.1 | %
The 2021 and 2020 effective tax rates differ from the federal statutory rate primarily due to state income tax expense and benefits associated with federal energy efficient home credits, and changes in valuation allowances relating to projected utilization of certain state net operating loss ("NOL") carryforwards. Income tax expense for 2021 and 2020 includes benefits associated with the extension of federal energy efficient home credits, including $56.8 million in 2020 related to homes closed in prior open tax years. This provision, which had previously expired in 2017, was extended to apply to homes closed through December 31, 2021. The 2019 effective tax rate differs from the federal statutory rate primarily due to state income tax expense on current year earnings, changes in valuation allowances relating to projected utilization of certain state NOL carryforwards, and state tax law changes. Deferred tax assets and liabilities reflect temporary differences arising from the different treatment of items for tax and accounting purposes. Components of our net deferred tax asset are as follows ($000’s omitted):
| At December 31,
| 2021 |  | 2020
Deferred tax assets: |  |  |
Accrued insurance | $ | 132,386 |  |  | $ | 135,703 |
Inventory valuation reserves | 62,806 |  |  | 78,518 |
State NOL carryforwards | 144,746 |  |  | 184,046 |
Other | 73,506 |  |  | 64,030 |
| 413,444 |  |  | 462,297 |
Deferred tax liabilities: |  |  |
Deferred income | (367,285) |  |  | (313,170) |
Intangibles and other | (47,475) |  |  | (46,595) |
| (414,760) |  |  | (359,765) |
Valuation allowance | (25,165) |  |  | (69,813) |
Net deferred tax asset (liability) | $ | (26,481) |  |  | $ | 32,719 |
We have state NOLs in various jurisdictions which may generally be carried forward up to 20 years, depending on the jurisdiction. Our state NOL carryforward deferred tax assets will expire if unused at various dates as follows: $28.6 million from 2022 to 2026 and $116.1 million from 2027 and thereafter. We evaluate our deferred tax assets each period to determine if a valuation allowance is required based on whether it is "more likely than not" that some portion of the deferred tax assets would not be realized. The ultimate realization of these deferred tax assets is dependent upon the generation of sufficient taxable income during future periods. We conduct our evaluation by considering all available positive and negative evidence, including, among other factors, historical operating results, forecasts of future profitability, the duration of statutory carryforward periods, and the outlooks for the U.S. housing industry and broader economy. The accounting for deferred taxes is based upon estimates of future results. Differences between estimated and actual results could result in changes in the valuation of our deferred tax assets that could have a material impact on our consolidated results of operations or financial position. Changes in existing tax laws could also affect actual tax results and the realization of deferred tax assets over time. Unrecognized tax benefits represent the difference between tax positions taken or expected to be taken in a tax return and the benefits recognized for financial statement purposes. We had $22.5 million and $30.9 million of gross unrecognized tax benefits at December 31, 2021 and 2020, respectively. If recognized, $17.8 million and $24.4 million, respectively, of these amounts would impact our effective tax rate. Additionally, we had accrued interest and penalties of $2.9 million and $2.8 million at December 31, 2021 and 2020, respectively. We do not expect the total amount of gross unrecognized tax benefits to increase or decrease by a material amount within the next twelve months. A reconciliation of the change in the unrecognized tax benefits is as follows ($000’s omitted):
| 2021 |  | 2020 |  | 2019
Unrecognized tax benefits, beginning of period | $ | 30,855 |  |  | $ | 40,300 |  |  | $ | 30,554 |
Increases related to positions taken during a prior period | 1,428 |  |  | — |  |  | 2,376 |
Decreases related to positions taken during a prior period | (8,896) |  |  | (12,981) |  |  | (7,918) |
Increases related to positions taken during the current period | 267 |  |  | 11,001 |  |  | 16,332 |
Decreases related to settlements with taxing authorities | — |  |  | (7,465) |  |  | (1,044) |
Decreases related to lapse of the applicable statute of limitations | (1,118) |  |  | — |  |  | — |
Unrecognized tax benefits, end of period | $ | 22,536 |  |  | $ | 30,855 |  |  | $ | 40,300 |
We continue to participate in the Compliance Assurance Process (“CAP”) with the IRS as an alternative to the traditional IRS examination process. Through the CAP program, we work with the IRS to achieve tax compliance by resolving issues prior to filing the tax return. We are also currently under examination by state taxing jurisdictions and anticipate finalizing certain of the examinations within the next twelve months. The outcome of these examinations is not yet determinable, and we are not aware of unrecorded liabilities. The statute of limitations for our major tax jurisdictions remains open for examination for tax years 2017 to 2021.

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- 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 -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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