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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

11. Income Taxes

The components of income tax expense were as follows for the years ended December 31:

 

 

2024

 

 

2023

 

 

2022

 

 

 

(in thousands)

 

Current:

 

 

 

 

 

 

 

Federal

 

$

287,131

 

 

$

468,635

 

 

$

789,465

 

State

 

 

41,528

 

 

 

77,475

 

 

 

125,460

 

 

 

 

328,659

 

 

 

546,110

 

 

 

914,925

 

Deferred:

 

 

 

 

 

 

 

 

Federal

 

 

(16,453

)

 

 

(82,150

)

 

 

(73,016

)

State

 

 

(2,579

)

 

 

(20,311

)

 

 

(19,445

)

 

 

 

(19,032

)

 

 

(102,461

)

 

 

(92,461

)

Income tax expense

 

$

309,627

 

 

$

443,649

 

 

$

822,464

 

 

Temporary differences, which give rise to deferred tax assets and liabilities, were as follows as of December 31:

 

 

2024

 

 

2023

 

 

 

(in thousands)

 

Deferred tax assets related to:

 

 

 

 

 

 

Operating lease liabilities

 

$

148,376

 

 

$

125,622

 

Insurance reserves

 

 

37,840

 

 

 

34,556

 

Accrued expenses

 

 

17,703

 

 

 

36,719

 

Operating loss and credit carryforwards

 

 

12,308

 

 

 

13,408

 

Stock-based compensation expense

 

 

10,931

 

 

 

8,643

 

Inventories

 

 

10,435

 

 

 

13,132

 

Accounts receivable

 

 

10,006

 

 

 

10,338

 

Other

 

 

312

 

 

 

7,813

 

Total deferred tax assets

 

 

247,911

 

 

 

250,231

 

Deferred tax liabilities related to:

 

 

 

 

 

 

Property, plant and equipment

 

 

(179,862

)

 

 

(166,799

)

Operating lease right-of-use assets

 

 

(140,255

)

 

 

(118,515

)

Goodwill and other intangible assets

 

 

(66,263

)

 

 

(121,052

)

Prepaid expenses

 

 

(9,698

)

 

 

(11,064

)

Total deferred tax liabilities

 

 

(396,078

)

 

 

(417,430

)

Net deferred tax liability

 

$

(148,167

)

 

$

(167,199

)

A reconciliation of the statutory federal income tax rate to our effective rate is provided below for the years ended December 31:

 

 

 

 

 

 

 

 

 

 

 

 

 

2024

 

 

2023

 

 

2022

 

 

Statutory federal income tax rate

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

 

State income taxes, net of federal income tax

 

 

2.4

 

 

 

2.3

 

 

 

2.3

 

 

Stock-based compensation windfall benefit

 

 

(2.0

)

 

 

(0.8

)

 

 

(0.5

)

 

Permanent difference - 162(m) limitation

 

 

0.8

 

 

 

0.5

 

 

 

0.3

 

 

Permanent difference - credits

 

 

(0.5

)

 

 

(0.6

)

 

 

(0.2

)

 

Permanent difference - other

 

 

0.2

 

 

 

0.2

 

 

 

—

 

 

Other

 

 

0.4

 

 

 

(0.2

)

 

 

0.1

 

 

 

 

 

22.3

%

 

 

22.4

%

 

 

23.0

%

 

We have $34.5 million of state net operating loss carryforwards and $0.7 million of state tax credit carryforwards expiring at various dates through 2036. We also have $48.6 million of federal net operating loss carryforwards expiring at various dates through 2034. We evaluate our deferred tax assets on a quarterly basis to determine whether a valuation allowance is required. In accordance with the Income Taxes topic of the Codification we assess whether it is more likely than not that some or all of our deferred tax assets will not be realized. Significant judgment is required in estimating valuation allowances for deferred tax assets and in making this determination, we consider all available positive and negative evidence and make certain assumptions. The realization of a deferred tax asset ultimately depends on the existence of sufficient taxable income in the applicable carryforward period. Changes in our

estimates of future taxable income and tax planning strategies will affect our estimate of the realization of the tax benefits of these tax carryforwards. As of December 31, 2024, or 2023, we carried no valuation allowances against our net deferred tax assets.

We base our estimate of deferred tax assets and liabilities on current tax laws and rates. In certain cases, we also base our estimate on business plan forecasts and other expectations about future outcomes. Changes in existing tax laws or rates could affect our actual tax results, and future business results may affect the amount of our deferred tax liabilities or the valuation of our deferred tax assets over time. Due to uncertainties in the estimation process, particularly with respect to changes in facts and circumstances in future reporting periods, as well as the residential homebuilding industry’s cyclicality and sensitivity to changes in economic conditions, it is possible that actual results could differ from the estimates used in previous analyses.

 

The balance for uncertain tax positions, excluding penalties and interest, was $19.7 million and $19.2 million as of December 31, 2024, and 2023, respectively, with $0.5 million, $2.9 million and $1.8 million recorded in the Company’s consolidated statements of operations for the years ended December 31, 2024, 2023 and 2022. We accrue interest and penalties on our uncertain tax positions as a component of our provision for income taxes. We accrued no significant interest and penalties in 2024, 2023 or 2022.

We are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions and in very limited situations, foreign jurisdictions. Based on completed examinations and the expiration of statutes of limitations, we have concluded all U.S. federal income tax matters for years through 2018. We are currently under IRS audit for various aspects of our 2019 and 2020 tax years. We report income-based tax in 41 states with various years open to examination.

In December 2021, the Organization for Economic Co-operation and Development (“OECD”) released Model Global Anti-Base Erosion rules under Pillar Two. These rules provide for the taxation of large multinational corporations at a minimum rate of 15%, calculated on a jurisdictional basis. Countries in which we operate enacted legislation to implement aspects of the Pillar Two rules beginning in 2024, with certain remaining impacts to be effective from January 1, 2025. The items enacted in 2024 did not have a material impact on our consolidated financial statements and we do not expect the items effective in 2025 to have a material impact on our consolidated financial statements.