XML 41 R24.htm IDEA: XBRL DOCUMENT v3.24.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes

NOTE 14. Income Taxes:

For the years ended December 31, 2023, 2022 and 2021, domestic and foreign pretax income, before noncontrolling interests, were $193.4 million and $81.0 million, $268.0 million and $57.7 million, and $1.5 billion and $93.1 million, respectively.

Income taxes are summarized as follows:

 

 

Year ended December 31,

 

 

2023

 

 

2022

 

 

2021

 

 

(in millions)

 

Current:

 

 

 

 

 

 

 

 

 

Federal

 

$

55.4

 

 

$

132.3

 

 

$

244.3

 

State

 

 

2.8

 

 

 

18.5

 

 

 

36.8

 

Foreign

 

 

11.6

 

 

 

18.3

 

 

 

19.6

 

 

 

69.8

 

 

 

169.1

 

 

 

300.7

 

Deferred:

 

 

 

 

 

 

 

 

 

Federal

 

 

(8.6

)

 

 

(80.3

)

 

 

64.8

 

State

 

 

(10.9

)

 

 

(25.2

)

 

 

24.0

 

Foreign

 

 

8.6

 

 

 

(3.2

)

 

 

2.7

 

 

 

(10.9

)

 

 

(108.7

)

 

 

91.5

 

 

$

58.9

 

 

$

60.4

 

 

$

392.2

 

 

The Company’s actual income tax expense differs from the expense computed by applying the federal income tax rate of 21% for the years ended December 31, 2023, 2022 and 2021. A reconciliation of these differences is as follows:

 

 

Year ended December 31,

 

 

2023

 

 

2022

 

 

2021

 

 

(dollars in millions)

 

Taxes calculated at federal rate

 

$

57.6

 

 

 

21.0

%

 

$

68.4

 

 

 

21.0

%

 

$

344.7

 

 

 

21.0

%

State taxes, net of federal benefit

 

 

(6.4

)

 

 

(2.3

)

 

 

(5.3

)

 

 

(1.5

)

 

 

48.0

 

 

 

2.9

 

Change in liability for tax positions

 

 

10.7

 

 

 

3.9

 

 

 

(0.8

)

 

 

(0.3

)

 

 

—

 

 

 

—

 

Foreign income taxed at different rates

 

 

9.5

 

 

 

3.5

 

 

 

2.1

 

 

 

0.6

 

 

 

1.8

 

 

 

0.1

 

Unremitted foreign earnings

 

 

1.2

 

 

 

0.4

 

 

 

—

 

 

 

—

 

 

 

1.0

 

 

 

0.1

 

Federal tax credits

 

 

(17.3

)

 

 

(6.3

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Valuation allowance

 

 

7.7

 

 

 

2.8

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Other items, net

 

 

(4.1

)

 

 

(1.5

)

 

 

(4.0

)

 

 

(1.1

)

 

 

(3.3

)

 

 

(0.2

)

 

$

58.9

 

 

 

21.5

%

 

$

60.4

 

 

 

18.7

%

 

$

392.2

 

 

 

23.9

%

 

The Company’s effective income tax rates (income tax expense as a percentage of income before income taxes) were 21.5%, 18.7%, and 23.9% for the years ended December 31, 2023, 2022, and 2021, respectively. The effective income tax rates differ from the federal statutory rate as a result of state and foreign income taxes for which the Company is liable, as well as permanent differences between amounts reported for financial statement purposes and amounts reported for income tax purposes, including the recognition of excess tax benefits or tax deficiencies associated with share-based payment transactions through income tax expense. In addition, the 2023 rate reflects tax credits claimed in current and prior years and a valuation allowance recorded against losses on certain equity investments. The effective income tax rate for 2022 also reflects the impact on pretax earnings from losses and impairments on certain equity investments and benefits from the resolution of state tax matters from prior years. The effective tax rate for 2021 also reflects benefits related to foreign tax law changes.

The primary components of temporary differences that give rise to the Company’s net deferred tax liability are as follows:

 

 

December 31,

 

 

2023

 

 

2022

 

 

(in millions)

 

Deferred tax assets:

 

 

 

 

 

 

Deferred revenue

 

$

8.6

 

 

$

8.3

 

Employee benefits

 

 

101.1

 

 

 

99.8

 

Bad debt reserves

 

 

8.7

 

 

 

11.8

 

Pension

 

 

13.3

 

 

 

12.6

 

Net operating loss carryforward

 

 

21.8

 

 

 

28.6

 

Foreign tax credit

 

 

3.8

 

 

 

4.7

 

Operating lease liabilities

 

 

52.3

 

 

 

58.6

 

Investments in affiliates

 

 

13.9

 

 

 

—

 

Securities

 

 

189.7

 

 

 

264.1

 

Other

 

 

12.2

 

 

 

11.2

 

 

 

425.4

 

 

 

499.7

 

Valuation allowance

 

 

(13.7

)

 

 

(7.4

)

 

 

411.7

 

 

 

492.3

 

Deferred tax liabilities:

 

 

 

 

 

 

Depreciable and amortizable assets

 

 

275.8

 

 

 

282.2

 

Claims and related salvage

 

 

88.5

 

 

 

81.6

 

Investments in affiliates

 

 

—

 

 

 

25.8

 

Operating lease assets

 

 

47.7

 

 

 

52.8

 

Unremitted foreign earnings

 

 

13.2

 

 

 

11.7

 

 

 

425.2

 

 

 

454.1

 

Net deferred tax (liability) asset

 

$

(13.5

)

 

$

38.2

 

The Inflation Reduction Act, which was signed into law in 2022, included various tax provisions that were effective for tax years beginning on or after January 1, 2023, including a 15% minimum income tax on certain large corporations and a 1% excise tax on corporate stock repurchases. These tax law changes did not have a material impact on the Company’s consolidated financial statements as of December 31, 2023.

The vesting of RSUs represents a tax benefit that has been reflected as a reduction to income taxes payable and income tax expense for the years ended December 31, 2023, 2022 and 2021. The benefits recorded were $0.7 million, $2.4 million and $1.8 million for the years ended December 31, 2023, 2022 and 2021, respectively.

At December 31, 2023, the Company had available a $2.8 million foreign tax credit carryover, net of a valuation allowance, and expects to utilize this credit within the carryover period.

At December 31, 2023, the Company had available net operating loss carryforwards for income tax purposes totaling $180.5 million, consisting of federal, state and foreign losses of $69.5 million, $100.6 million and $10.4 million, respectively. Of the aggregate net operating losses, $95.5 million has an indefinite expiration and $85.0 million will begin to expire in various years starting in 2028.

The Company evaluates the realizability of its deferred tax assets by assessing the valuation allowance and makes adjustments to the allowance as necessary. The factors used by the Company in assessing the likelihood of realization of its deferred tax assets include forecasts of future taxable income and available tax planning strategies that could be implemented. The Company’s ability to achieve forecasted taxable income in the applicable taxing jurisdictions could affect the ultimate realization of its deferred tax assets At December 31, 2023 and 2022, the Company carried a valuation allowance of $13.7 million and $7.4 million, respectively. The balance for 2023 includes $9.6 million related to capital losses, $3.0 million related to net operating losses, and $1.1 million related to other deferred tax assets. The balance for 2022 includes $5.7 million related to net operating losses and $1.7 million related to other deferred tax assets. The increase in the overall valuation allowance during 2023 was primarily due to the Company’s assessment of its ability to realize tax benefits related to capital losses on certain equity investments. Based on future operating results in certain jurisdictions, it is possible that the current valuation allowance positions of those jurisdictions could be adjusted during the next 12 months.

As of December 31, 2023, 2022 and 2021, the liability for income taxes associated with uncertain tax positions was $12.4 million, $3.2 million and $7.9 million, respectively. The net increase in the liability during 2023 from 2022 was primarily attributable to positions taken on the Company’s tax returns for current and prior years and the settlement of a foreign tax matter for prior years. The net decrease in the liability in 2022 from 2021 was primarily attributable to the resolution of state tax matters from prior years. The liabilities could be reduced by $0.8 million, $2.2 million and $2.9 million as of December 31, 2023, 2022 and 2021, respectively, due to offsetting tax benefits associated with the correlative effects of potential adjustments, including timing adjustments, and state income taxes. The net liability, if recognized, would favorably affect the Company’s effective income tax rate.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits for the years ended December 31, 2023, 2022 and 2021 is as follows:

 

 

Year ended December 31,

 

 

2023

 

 

2022

 

 

2021

 

 

(in millions)

 

Unrecognized tax benefits—beginning balance

 

$

3.2

 

 

$

7.9

 

 

$

7.2

 

Gross increases (decreases)—prior period tax
   positions

 

 

8.4

 

 

 

(0.2

)

 

 

—

 

Gross increases—current period tax positions

 

 

5.2

 

 

 

0.8

 

 

 

0.7

 

Settlements with taxing authorities

 

 

(4.4

)

 

 

(5.3

)

 

 

—

 

Unrecognized tax benefits—ending balance

 

$

12.4

 

 

$

3.2

 

 

$

7.9

 

 

The Company’s continuing practice is to recognize interest and penalties related to uncertain tax positions in income tax expense. Accrued interest and penalties, net of tax benefits, related to uncertain tax positions totaled $0.8 million as of December 31, 2023 and, as of December 31, 2022 and 2021, were not material.

The Company, or one of its subsidiaries, files income tax returns in the U.S. federal jurisdiction, various state jurisdictions and in various non-U.S. jurisdictions. The primary non-federal jurisdictions are California, Canada, India and the United Kingdom. As of December 31, 2023, the Company is generally no longer subject to income tax examinations for U.S. federal, state and non-U.S. jurisdictions for years prior to 2020, 2019 and 2014, respectively.

It is reasonably possible that the unrecognized benefit with respect to certain of the Company’s unrecognized tax positions may increase or decrease within the next 12 months. Any such change may be the result of either ongoing audits or the expiration of federal and state statutes of limitations for the assessment of taxes.

The Company records a liability for potential tax assessments based on its estimate of the potential exposure. New tax laws and new interpretations of laws and rulings by taxing authorities may affect the liability for potential tax assessments. Due to the subjectivity and complex nature of the underlying issues, actual payments or assessments may differ from estimates. To the extent that the Company’s estimates differ from actual payments or assessments, income tax expense is adjusted. The Company’s income tax returns in several jurisdictions are being examined by various taxing authorities. The Company believes that adequate amounts of tax and related interest from any adjustments that may result from these examinations have been provided for.