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Note 7 - Income Taxes

12 Months Ended

Dec. 31, 2020

7.	Income Taxes

Income tax expense attributable to earnings before income taxes consists of (in thousands):

	Years ended December 31,
	2020			2019		2018
Current:
Federal	$	138,952		$	87,977	$	22,904
State and local		28,094			20,981		26,738
		167,046			108,958		49,642
Deferred:
Federal		(2,392	)		51,229		97,670
State and local		(4,664	)		4,388		3,921
		(7,056	)		55,617		101,591
Total tax expense/(benefit)	$	159,990		$	164,575	$	151,233

Income tax expense attributable to earnings before income taxes differed from the amounts computed using the statutory federal income tax rate of 21% as follows (in thousands):

	Years ended December 31,
	2020			2019			2018
Income tax at federal statutory rate	$	139,865		$	142,988		$	134,572
State tax, net of federal effect		20,071			19,293			24,627
Federal tax reform		-			-			(3,219	)
Benefit of stock compensation		(3,503	)		(1,238	)		(4,919	)
199/R&D credit		-			(200	)		1,000
Nondeductible meals and entertainment		1,344			1,688			1,071
Change in effective state tax rate, net of federal benefit		98			1,562			(1,469	)
Other, net		2,115			482			(430	)
Total tax expense	$	159,990		$	164,575		$	151,233

Income taxes receivable was $3.1 million and $60.9 million at December 31, 2020 and 2019, respectively. These amounts have been included in other receivables in our Consolidated Balance Sheets. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2020 and 2019, are presented below (in thousands):

	December 31,
	2020			2019
Deferred tax assets:
Insurance accruals	$	24,304		$	27,180
Allowance for doubtful accounts		9,270			8,052
Compensation accrual		10,809			4,925
CARES Act payroll tax deferral		19,931			-
Deferred compensation accrual		25,702			24,521
Federal benefit of state uncertain tax positions		10,312			9,867
Lease liabilities		32,625			30,251
State NOL carry-forward		8,460			7,495
Other		4,237			6,357
Total gross deferred tax assets		145,650			118,648
Valuation allowance		(8,460	)		(7,495	)
Total deferred tax assets, net of valuation allowance		137,190			111,153
Deferred tax liabilities:
Plant and equipment, principally due to differences in depreciation		748,883			729,016
Prepaid permits and insurance, principally due to expensing for income tax purposes		42,126			39,285
Lease right-of-use assets		32,952			30,014
Other		5,251			11,916
Total gross deferred tax liabilities		829,212			810,231
Net deferred tax liability	$	692,022		$	699,078

Guidance on accounting for uncertainty in income taxes prescribes recognition and measurement criteria and requires that we assess whether the benefits of our tax positions taken are more likely than not of being sustained under tax audits. We have made adjustments to the balance of unrecognized tax benefits, a component of other long-term liabilities on our Consolidated Balance Sheets, as follows (in millions):

	December 31,
	2020			2019			2018
Beginning balance	$	50.6		$	52.2		$	45.3
Additions based on tax positions related to the current year		9.8			11.0			13.9
Additions/(reductions) based on tax positions taken in prior years		13.9			(6.5	)		(2.4	)
Reductions due to settlements		(1.0	)		-			-
Reductions due to lapse of applicable statute of limitations		(7.2	)		(6.1	)		(4.6	)
Ending balance	$	66.1		$	50.6		$	52.2

At December 31, 2020 and 2019, we had a total of $66.1 million and $50.6 million, respectively, in gross unrecognized tax benefits. Of these amounts, $57.1 million and $41.8 million represent the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate in 2020 and 2019, respectively. Interest and penalties related to income taxes are classified as interest expense in our Consolidated Statements of Earnings. The amount of accrued interest and penalties recognized during the years ended December 31, 2020, 2019, and 2018, was $2.9 million, $3.2 million, and $2.4 million, respectively. Future changes to unrecognized tax benefits will be recognized as income tax expense and interest expense, as appropriate. The total amount of accrued interest and penalties for such unrecognized tax benefits at December 31, 2020 and 2019, was $5.6 million and $4.8 million, respectively.

Tax years 2017 and forward remain subject to examination by federal tax jurisdictions, while tax years 2010 and forward remain open for state jurisdictions.

- 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.

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