XML 31 R17.htm IDEA: XBRL DOCUMENT
v3.20.4

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2020
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES For the years ended December 31, 2020, 2019 and 2018, we recognized income tax expense comprised of the following (in thousands):
| December 31,
| 2020 |  | 2019 |  | 2018
Federal current tax | $ | (256) |  |  | $ | (161) |  |  | $ | (765) |
State current tax | (1,608) |  |  | 7,715 |  |  | 7,263 |
Other current tax | 27 |  |  | 22 |  |  | 20 |
Federal deferred tax | (303) |  |  | 3,396 |  |  | (2,020) |
State deferred tax | 3,035 |  |  | (4,743) |  |  | (4,104) |
Income tax expense | $ | 895 |  |  | $ | 6,229 |  |  | $ | 394 |
A reconciliation of the statutory U.S. federal rate and effective rates is as follows:
| Years Ended December 31,
| 2020 |  | 2019 |  | 2018
Federal tax | $ | (179) |  |  |  |  | $ | 6,231 |  |  |  |  | $ | 8,256 |  |  |
State franchise tax, net of federal benefit | 779 |  |  |  |  | 3,891 |  |  |  |  | 1,332 |  |  |
Other non deductible expenses | 301 |  |  |  |  | 674 |  |  |  |  | 471 |  |  |
Noncontrolling interests in partnerships | (2,748) |  |  |  |  | (1,824) |  |  |  |  | (1,237) |  |  |
Changes in valuation allowance | (33) |  |  |  |  | (462) |  |  |  |  | 1,760 |  |  |
Return to provision | (2,252) |  |  |  |  | (1,324) |  |  |  |  | 1,494 |  |  |
PPP Loan | (850) |  |  |  |  | — |  |  |  |  | — |  |  |
Gain on change in control | — |  |  |  |  | — |  |  |  |  | (8,303) |  |  |
Deferred true-ups and other | 4,839 |  |  |  |  | (761) |  |  |  |  | (4,254) |  |  |
Uncertain tax provisions | 1,036 |  |  |  |  | (217) |  |  |  |  | 1,046 |  |  |
Other reconciling items | 2 |  |  |  |  | 21 |  |  |  |  | (171) |  |  |
Income tax expense | $ | 895 |  |  |  |  | $ | 6,229 |  |  |  |  | $ | 394 |  |  |
Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial and income tax reporting purposes and operating loss carryforwards. Our deferred tax assets and liabilities comprise the following (in thousands):
| December 31,
Deferred tax assets: | 2020 |  | 2019
Net operating losses | $ | 59,154 |  |  | $ | 34,490 |
Accrued expenses | 3,948 |  |  | 4,280 |
Operating lease liability | 124,139 |  |  | 126,546 |
Equity compensation | 1,903 |  |  | 1,374 |
Allowance for doubtful accounts | 21,284 |  |  | 27,220 |
Other | 11,512 |  |  | 4,616 |
Valuation allowance | (5,315) |  |  | (5,348) |
Total Deferred Tax Assets | $ | 216,625 |  |  | $ | 193,178 |
Deferred tax liabilities: |  |  |
Property and equipment | (24,298) |  |  | (6,450) |
Goodwill | (28,457) |  |  | (24,637) |
Intangibles | (9,608) |  |  | (6,669) |
Operating lease right-of-use asset | (112,956) |  |  | (115,364) |
Other | (6,619) |  |  | (5,510) |
Total Deferred Tax Liabilities | $ | (181,938) |  |  | $ | (158,630) |
Net Deferred Tax Asset | $ | 34,687 |  |  | $ | 34,548 |
As of December 31, 2020, the Company had federal net operating loss carryforwards of approximately $251.6 million, which comprise of definite and indefinite net operating losses. We had federal net operating loss carryforwards of approximately $186.2 million, which expire at various intervals from the years 2023 to 2037, and had carryforwards of $65.4 million of net operating losses which do not expire. Federal net operating losses generated following December 31, 2017 carryover indefinitely and may generally be used to offset up to 80% of future taxable net income. The Company also had state net operating loss carryforwards of approximately $57.9 million, which expire at various intervals from the years 2020 through 2039. As of December 31, 2020, $24.6 million of our federal net operating loss carryforwards acquired in connection with the 2011 acquisition of Raven Holdings U.S., Inc. and the 2019 acquisition of Nulogix Health, Inc. are subject to limitations related to their utilization under Section 382 of the Internal Revenue Code. Future ownership changes as determined under Section 382 of the Internal Revenue Code could further limit the utilization of net operating loss carryforwards. We considered all evidence available when determining whether deferred tax assets are more likely-than-not to be realized, including projected future taxable income, scheduled reversals of deferred tax liabilities, prudent tax planning strategies, and recent financial operations. The evaluation of this evidence requires significant judgment about the forecasts of future taxable income, based on the plans and estimates we are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income. As of December 31, 2020, we have determined that deferred tax assets of $216.6 million are more likely-than-not to be realized. We have also taken into consideration deferred tax liabilities of $28.5 million are related to book basis in goodwill that has an indefinite life. We file consolidated income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. We continue to reinvest earnings of the non-US entities for the foreseeable future and therefore have not recognized any U.S. tax expense on these earnings. With limited exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2015. We are currently under audit in the state of California for the tax years of 2016 and 2017. It is too early to assess the impact such audits may have on the financial position of the Company, however we do not anticipate the results of any open examinations would result in a material change to our financial position. At December 31, 2020, the Company has unrecognized tax benefits of $5.5 million of which $4.4 million will affect the effective tax rate if recognized. A reconciliation of the total gross amounts of unrecognized tax benefits for the years ended are as follows (in thousands):
| December 31,
| 2020 |  | 2019 |  | 2018
Balance at beginning of year | $ | 4,320 |  |  | $ | 4,629 |  |  | $ | 3,615 |
Increases related to prior year tax positions | 1,382 |  |  | (34) |  |  | 896 |
Increases related to current year tax positions | 3 |  |  | 119 |  |  | 111 |
Expiration of the statute of limitations for the assessment of taxes | (221) |  |  | (393) |  |  | — |
Increase (decrease) related to change in rate | — |  |  | (1) |  |  | 7 |
Balance at end of year | $ | 5,484 |  |  | $ | 4,320 |  |  | $ | 4,629 |
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. During the year ended December 31, 2020 the Company accrued approximately $0.1 million of interest and penalties. As of December 31, 2020, accrued interest and penalties amounted to approximately $0.4 million. On March 27, 2020, the United States enacted the Coronavirus Aid, Relief and Economic Security Act (CARES Act). The Cares Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the United States economy and fund a nationwide effort to curtail the effect of COVID-19. The CARES Act provides sweeping tax changes in response to the COVID-19 pandemic, some of the more significant provisions are removal of certain limitations on utilization of net operating losses, increasing the loss carryback period for certain losses to five years, and increasing the ability to deduct interest expense, as well as amending certain provisions of the previously enacted Tax Cuts and Jobs Act. At December 31, 2020, the Company has taken advantage of the accelerated tax depreciation related to qualified improvement property and the Paycheck Protection Program loan allowed under the CARES Act. On December 27, 2020, the United States enacted the Consolidated Appropriations Act of 2021 (“CAA”). The CAA includes provisions extending certain CARES Act provisions and adds coronavirus relief, tax and health extenders. The Company will continue to evaluate the impact of the CAA and its impact on our financial statements in 2021 and beyond. In June 29, 2020, the state of California passed Assembly Bill 85 which suspends the California net operating loss deduction for the 2020-2022 tax years and the R&D credit usage for the same period (for credit usages in excess of $5M). These suspensions were considered in preparation of the 2020 financial statements.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration