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Note 7 - Income Taxes
 12 Months Ended
Dec. 31, 2021
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

NOTE 7.    INCOME TAXES

Deferred Income Tax Assets and Liabilities

Deferred income tax assets and liabilities are provided to record the effects of temporary differences between the tax basis of an asset or liability and its amount as reported in our consolidated balance sheets. These temporary differences result in taxable or deductible amounts in future years.

 

The components comprising our deferred income tax assets and liabilities are as follows:

 

  

December 31,

 

(In thousands)

 

2021

  

2020

 

Deferred income tax assets

        

Federal net operating loss carryforwards

 $—  $117,564 

State net operating loss carryforwards

  73,884   68,925 

Operating lease liability

  189,180   199,083 

Share-based compensation

  13,811   11,276 

Other

  66,378   60,895 

Gross deferred income tax assets

  343,253   457,743 

Valuation allowance

  (67,525)  (50,548)

Deferred income tax assets, net of valuation allowance

  275,728   407,195 
         

Deferred income tax liabilities

        

Difference between book and tax basis of property and intangible assets

  307,194   295,343 

State tax liability

  40,216   41,028 

Right-of-use asset

  185,691   195,038 

Other

  7,539   6,838 

Gross deferred income tax liabilities

  540,640   538,247 

Deferred income tax liabilities, net

 $264,912  $131,052 

 

At December 31, 2021, we have unused federal general business tax credits of approximately $15.3 million which may be carried forward or used until expiration beginning in the year ending 2037. We have state income tax net operating loss carryforwards of approximately $1.2 billion, which may be used to reduce future state income taxes. The state net operating loss carryforwards will expire in various years ranging from 2022 to 2041, if not fully utilized.

 

Valuation Allowance on Deferred Tax Assets

Management assesses available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. In evaluating our ability to recover deferred tax assets, we consider whether it is more likely than not that some portion or all the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies and results of recent operations.

 

We have maintained a valuation allowance against certain federal and state deferred tax assets as of December 31, 2021 due to uncertainties related to our ability to realize the tax benefits associated with these assets. The balance of this valuation allowance is $67.5 million as of  December 31, 2021. This is an increase of $17.0 million from the prior year for current year state tax losses in certain states. In assessing the need to establish a valuation allowance, we consider, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of profitability and taxable income, the duration of statutory carryforward periods, our experience with the utilization of operating loss and tax credit carryforwards before expiration and tax planning strategies. Valuation allowances are evaluated periodically and subject to change in future reporting periods as a result of changes in the factors noted above.

 

Provision (Benefit) for Income Taxes

A summary of the provision (benefit) for income taxes is as follows:

 

  

Year Ended December 31,

 

(In thousands)

 

2021

  

2020

  

2019

 

Current

            

Federal

 $—  $—  $— 

State

  6,100   (58)  3,475 

Total current taxes provision (benefit)

  6,100   (58)  3,475 

Deferred

            

Federal

  122,796   (35,231)  44,877 

State

  11,197   (1,025)  (3,862)

Total deferred taxes provision (benefit)

  133,993   (36,256)  41,015 

Provision (benefit) for income taxes

 $140,093  $(36,314) $44,490 

 

The following table provides a reconciliation between the federal statutory rate and the effective income tax rate, expressed as a percentage of income (loss) from continuing operations before income taxes:

 

  

Year Ended December 31,

 

(In thousands)

 

2021

  

2020

  

2019

 

Tax at federal statutory rate

  21.0%  21.0%  21.0%

State income taxes, net of federal benefit

  2.3%  0.5%  (0.2)%

Compensation-based credits

  (0.1)%  0.6%  (1.2)%

Nondeductible expenses

  0.1%  (0.4)%  0.4%

Tax exempt interest

  (0.1)%  0.2%  (0.2)%

Company provided benefits

  (0.1)%  (1.3)%  1.6%

Other, net

  0.1%  0.6%  0.4%

Effective tax rate

  23.2%  21.2%  21.8%

 

Our tax provision for the year ended December 31, 2021 was favorably impacted by benefits related to equity compensation and tax credits and unfavorably impacted by state taxes, nondeductible expenses including nondeductible compensation and employee benefit expenses.

 

Our tax benefit for the year ended  December 31, 2020 was favorably impacted by state audit settlements in connection with our Louisiana tax examinations and the realization of certain unrecognized tax benefits, inclusive of the reversal of related accrued interest. Our tax benefit was also favorably impacted by benefits related to equity compensation and tax credits and unfavorably impacted by nondeductible expenses.

 

Our tax provision for the year ended  December 31, 2019 was favorably impacted by benefits related to equity compensation and tax credits and unfavorably impacted by nondeductible expenses.

 

Status of Examinations

We generated net operating losses on our federal income tax returns for years 2011 through 2013 and in 2020. These returns remain subject to federal examination until the statute of limitations expires for the year in which the net operating losses are utilized. In 2021, we are projecting utilization of all our federal net operating losses.

 

As it relates to our material state tax returns, we are subject to examination for tax years ended on or after December 31, 2012. The statute of limitations will expire over the period October 2022 through November 2025.

 

We believe that we have adequately reserved for any tax liability; however, the ultimate resolution of these examinations may result in an outcome that is different than our current expectation. We do not believe the ultimate resolution of these examinations will have a material impact on our consolidated financial statements.

 

Other Long-Term Tax Liabilities

The impact of an uncertain income tax position taken in our income tax return is recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position is not recognized if it has less than a 50% likelihood of being sustained. Our liability for uncertain tax positions is recorded as other long-term tax liabilities in our consolidated balance sheets.

 

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

 

  

Year Ended December 31,

 

(In thousands)

 

2021

  

2020

  

2019

 

Unrecognized tax benefit, beginning of year

 $—  $2,482  $2,482 

Additions:

            

Tax positions related to current year

  —   —   — 

Reductions:

            

Tax positions related to prior years

  —   (2,482)  — 

Unrecognized tax benefit, end of year

 $—  $—  $2,482 

 

During the third quarter of 2020, we settled our Louisiana tax audits for the years ended 2001 through 2009. As a result of the resolution of theses audits, we reduced our unrecognized tax benefits by $2.5 million of which $2.0 million impacted our effective tax rate. We reversed the accrual of interest related to unrecognized tax benefits in our income tax provision. There is no accrual required for interest and penalties at both  December 31, 2021 and 2020 in our consolidated balance sheet.

 

We do not anticipate any material changes to our unrecognized tax benefits over the next twelve-month period.