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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | NOTE 1 4. INCOME TAXES As a REIT, we generally are not subject to federal and state corporate income taxes on income from investments in real estate that we distribute to our shareholders. We conduct certain activities through our PotlatchDeltic TRS which are subject to corporate level federal and state income taxes. These activities are principally comprised of our wood products manufacturing operations and certain real estate investments. Therefore, income tax expense or benefit is primarily due to income or loss of the PotlatchDeltic TRS, as well as permanent book versus tax differences and discrete items. We were also subject to corporate taxes on built-in gains (the excess of fair market value over tax basis on the merger date) on sales of former Deltic real property held by the REIT during the five years following the Deltic merger (until February 2023). The sale of standing timber is not subject to built-in gains tax. Income taxes consist of the following for the year ended December 31:
(in thousands) |  | 2024 |  |  | 2023 |  |  | 2022 |
Current |  | $ | (913 | ) |  | $ | 9,053 |  |  | $ | 70,669 |
Deferred |  |  | (12,776 | ) |  |  | (9,501 | ) |  |  | (5,302 | )
Net operating loss carryforwards |  |  | — |  |  |  | 232 |  |  |  | 45 |
Income taxes |  | $ | (13,689 | ) |  | $ | (216 | ) |  | $ | 65,412 |
Income taxes differ from the amount computed by applying the statutory federal income tax rate of 21% to income before income taxes due to the following for the year ended December 31:
(in thousands, except effective tax rate) |  | 2024 |  |  | 2023 |  |  | 2022 |
U.S. federal statutory income tax |  | $ | 1,719 |  |  | $ | 12,996 |  |  | $ | 83,855 |
REIT income not subject to federal income tax |  |  | (13,253 | ) |  |  | (9,766 | ) |  |  | (27,085 | )
Federal unrecognized tax benefit change |  |  | (1,146 | ) |  |  | (1,638 | ) |  |  | — |
State income taxes, net of federal tax benefit |  |  | (1,127 | ) |  |  | (862 | ) |  |  | 9,478 |
Other items, net 1 |  |  | 118 |  |  |  | (946 | ) |  |  | (836 | )
Income taxes |  | $ | (13,689 | ) |  | $ | (216 | ) |  | $ | 65,412 |
Effective tax rate |  |  | (167.2 | %) |  |  | (0.3 | %) |  |  | 16.4 | %
1. | Includes $1.0 million of deferred tax rate changes for the year ended December 31, 2023.
The tax effects of significant temporary differences creating deferred tax assets and liabilities at December 31 were:
(in thousands) |  | 2024 |  |  | 2023 |
Deferred tax assets: |  |  |  |  |  |
Pension and other postretirement employee benefits |  | $ | 20,342 |  |  | $ | 18,098 |
Inventories |  |  | 754 |  |  |  | 892 |
Nondeductible accruals |  |  | 1,921 |  |  |  | 1,663 |
Incentive compensation |  |  | 1,946 |  |  |  | 1,444 |
Employee benefits |  |  | 1,450 |  |  |  | 1,451 |
Net operating loss carryforwards |  |  | 25,012 |  |  |  | — |
Other |  |  | 944 |  |  |  | 790 |
Total deferred tax assets |  |  | 52,369 |  |  |  | 24,338 |
Deferred tax liabilities: |  |  |  |  |  |
Timber and timberlands, net |  |  | (1,820 | ) |  |  | (1,827 | )
Property, plant and equipment, net |  |  | (66,724 | ) |  |  | (51,704 | )
Intangible assets, net |  |  | (3,223 | ) |  |  | (3,590 | )
Real estate development |  |  | (230 | ) |  |  | (982 | )
Other |  |  | (1,495 | ) |  |  | (2,876 | )
Total deferred tax liabilities |  |  | (73,492 | ) |  |  | (60,979 | )
Deferred tax liabilities, net |  | $ | (21,123 | ) |  | $ | (36,641 | )
We believe it is more likely than not that we will have sufficient future taxable income to realize our deferred tax assets. Net operating loss (NOL) carryforwards consist of the following at December 31:
(amounts in thousands) |  | 2024 |  |  | 2023 |  |  | Expiration
Federal NOL carryforwards - Post TCJA 1 |  | $ | 104,938 |  |  | $ | — |  |  | None
Federal NOL carryforwards - Pre TCJA 2 |  | $ | 12,307 |  |  | $ | 12,307 |  |  | 2035 - 2037
State NOL carryforwards 3 |  | $ | 65,709 |  |  | $ | 4,283 |  |  | Various
1. | The Tax Cuts and Jobs Act ("TCJA") was signed into law on December 22, 2017. The TCJA lifted the 20-year Federal NOL carryforward period but utilization of the carryforwards may be subject to a limitation of 80% of taxable income.
2. | These net operating loss carryforwards were acquired in the CatchMark merger have been reduced for Section 382 limitations under the Internal Revenue Code and are netted against corresponding uncertain tax position liabilities.
3. | The state NOL carryforwards total is made up of several jurisdictions that expire over various times. A portion of the state NOLs were acquired in the CatchMark merger have been reduced for Section 382 limitations under the Internal Revenue Code, and are netted against corresponding uncertain tax position liabilities. No state NOL is set to expire before December 31, 2032.
In conjunction with the CatchMark merger, we recorded uncertain tax position liabilities plus any applicable accrued interest, related to the treatment of certain intercompany transactions between CatchMark's REIT and its taxable REIT subsidiary. These liabilities are included in Other long-term obligations and Deferred tax liabilities, net in our Consolidated Balance Sheets. At December 31, 2024 and 2023, we had $6.3 million and $7.8 million, respectively, of unrecognized tax benefits, most of which, if recognized, would affect the annual effective tax rate. The following is a reconciliation of the beginning and ending unrecognized tax benefits for the year ended December 31:
(in thousands) |  | 2024 |  |  | 2023 |
Balance at January 1 |  | $ | 7,786 |  |  | $ | 8,306 |
Additions for tax positions related to the current year |  |  | — |  |  |  | 249 |
Additions for tax positions of prior years |  |  | 13 |  |  |  | 1,545 |
Reduction for tax positions of prior years |  |  | (13 | ) |  |  | (334 | )
Lapse of statutes of limitations |  |  | (1,460 | ) |  |  | (1,980 | )
Balance at December 31 |  | $ | 6,326 |  |  | $ | 7,786 |
During the year ended December 31, 2024 and 2023, we reduced our uncertain tax positions due to the lapse of the statute of limitations by $1.5 million and $2.0 million, respectively. We are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months. We reflect accrued intere st related to tax obligations, as well as penalties, in our provision for income taxes. For the years ended December 31, 2024, 2023 and 2022, we recognized insignificant amounts related to interest and penalties in our tax provision. At December 31, 2024, and 2023, we had insignificant amounts of accrued interest related to tax obligations and tax positions taken on our tax returns, and no accrued interest receivable with respect to open tax refunds. The following table summarizes the tax years subject to examination by major taxing jurisdictions:
Jurisdiction |  | Years
Federal |  | 2021 - 2024
Arkansas |  | 2021 - 2024
Idaho |  | 2021 - 2024
Illinois |  | 2020 - 2024
Michigan |  | 2020 - 2024
Minnesota |  | 2020 - 2024
Georgia |  | 2021 - 2024

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