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Note 8 - Income Taxes
 12 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

NOTE 8.    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)

 

2023

  

2022

 

Deferred income tax assets

        

State net operating loss carryforwards

 $47,020  $53,889 

Operating lease liability

  170,351   178,014 

Share-based compensation

  14,301   13,119 

Other

  28,362   40,144 

Gross deferred income tax assets

  260,034   285,166 

Valuation allowance

  (10,175)  (59,398)

Deferred income tax assets, net of valuation allowance

  249,859   225,768 
         

Deferred income tax liabilities

        

Difference between book and tax basis of property and intangible assets

  334,772   328,062 

State tax liability

  25,066   32,720 

Right-of-use asset

  166,600   174,373 

Other

  12,247   9,222 

Gross deferred income tax liabilities

  538,685   544,377 

Deferred income tax liabilities, net

 $288,826  $318,609 

 

At December 31, 2023, we have state income tax net operating loss carryforwards of approximately $809.1 million, which may be used to reduce future state income taxes. The majority of the state net operating loss carryforwards will expire in various years ranging from 2024 to 2043, if not fully utilized, and the remaining may be used indefinitely.

 

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, 2023 due to uncertainties related to our ability to realize the tax benefits associated with these assets. The balance of this valuation allowance is $10.2 million as of  December 31, 2023. This is a decrease of $49.2 million from the prior year due to the release of our valuation allowance 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 for Income Taxes

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

 

  

Year Ended December 31,

 

(In thousands)

 

2023

  

2022

  

2021

 

Current

            

Federal

 $148,726  $129,424  $— 

State

  14,937   10,843   6,100 

Total current taxes provision

  163,663   140,267   6,100 

Deferred

            

Federal

  18,930   44,115   122,796 

State

  (49,709)  5,047   11,197 

Total deferred taxes provision

  (30,779)  49,162   133,993 

Provision for income taxes

 $132,884  $189,429  $140,093 

 

The following table provides a reconciliation between the federal statutory rate and the effective income tax rate, expressed as a percentage of income before income taxes:

 

  

Year Ended December 31,

 

(In thousands)

 

2023

  

2022

  

2021

 

Tax at federal statutory rate

  21.0%  21.0%  21.0%

State income taxes, net of federal benefit

  (3.7)%  1.5%  2.3%

Compensation-based credits

  (0.3)%  (0.3)%  (0.1)%

Nondeductible expenses

  0.2%  0.2%  0.1%

Tax exempt interest

  —%  —%  (0.1)%

Company provided benefits

  0.4%  0.4%  (0.1)%

Other, net

  —%  0.1%  0.1%

Effective tax rate

  17.6%  22.9%  23.2%

 

Our tax provision for the year ended December 31, 2023 was favorably impacted by a second quarter 2023 release of state valuation allowances and inclusion of excess tax benefits, which were partially offset by the unfavorable impact of state taxes and certain nondeductible expenses, as a component of the provision for income taxes.

 

Our tax provision for the year ended  December 31, 2022 was unfavorably impacted by state taxes and certain nondeductible expenses, including nondeductible compensation and employee benefit expenses, which were partially offset by tax credits and the inclusion of excess tax benefits related to equity compensation as a component of the provision for income taxes.

 

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.

 

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. We utilized all our federal net operating losses in 2021.

 

As it relates to our material state tax returns, we are subject to examination for tax years ended on or after December 31, 2014. The statute of limitations will expire over the period October 2024 through November 2027.

 

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. If applicable, our liability for uncertain tax positions is recorded as other long-term tax liabilities in our consolidated balance sheets. As of December 31, 2023 and 2022 and during the years ended December 31, 2023, 2022 and 2021, the Company had no uncertain tax positions. We do not anticipate any material changes to our unrecognized tax benefits over the next twelve-month period.