XML 33 R20.htm IDEA: XBRL DOCUMENT
v3.22.4

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2022
INCOME TAXES | 12. INCOME TAXES As discussed in Note 1, the Company operated in compliance with REIT requirements for federal income tax purposes from January 1, 2013 through December 31, 2020. During the years the Company elected REIT status, the Company was required to distribute at least 90% of its taxable income (including dividends paid to it by its TRSs) and did not pay federal income taxes on the amount distributed to its stockholders. In addition, the Company was required to meet a number of other organizational and operational requirements, which the Company continued to meet through the year ended December 31, 2020. Most states where CoreCivic holds investments in real estate conform to the federal rules recognizing REITs. Certain subsidiaries made an election with the Company to be treated as TRSs in conjunction with the Company's REIT election. The TRS elections permitted CoreCivic to engage in certain business activities in which the REIT could not engage directly. A TRS is subject to federal and state income taxes on the income from these activities and therefore, CoreCivic included a provision for taxes in its consolidated financial statements even during periods it operated as a REIT. On August 5, 2020, the Company announced that the BOD unanimously approved a plan to revoke its REIT election and become a taxable C Corporation, effective January 1, 2021. As a result, the Company is no longer required to operate under REIT rules, including the requirement to distribute at least 90% of its taxable income to its stockholders, which provides the Company with greater flexibility to use its free cash flow. Effective January 1, 2021, the Company became subject to federal and state income taxes on its taxable income at applicable tax rates and is no longer entitled to a tax deduction for dividends paid. During the years in which the Company elected REIT status, CoreCivic was entitled to a deduction for dividends paid, resulting in a substantial reduction in the amount of the REIT's federal income tax expense. During those years, substantially all of CoreCivic's income tax expense was incurred based on the earnings generated by its TRSs. CoreCivic recorded an income tax expense of $43.0 million, $138.0 million, and $4.4 million for the years ended December 31, 2022, 2021 and 2020, respectively. Income tax expense during 2021 included $114.2 million primarily resulting from the revaluation of the Company's net deferred tax liabilities due to the completion of all significant actions necessary to revoke its REIT election. No catch-up tax payments or penalties resulted from the revocation of the Company's REIT election. Income tax expense during 2020 included $3.1 million that had been deferred during the construction period of the Lansing Correctional Facility, which was owned by a TRS of the Company until it converted to a qualified REIT subsidiary ("QRS") upon completion of construction in the first quarter of 2020. Because ownership of this facility reverts to the state of Kansas upon expiration of the twenty-year lease, the construction and subsequent lease of the facility to the State was a deemed sale for federal and state income tax purposes. The gain on sale was reported as a deferred tax asset based on the percentage of completion method over the construction period. This deferred tax asset was revalued to zero upon conversion of the TRS to a QRS. Income tax expense (benefit) is comprised of the following components (in thousands):
|  | For the Years Ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Current income tax expense (benefit) |  |  |  |  |  |  |  |  |
Federal |  | $ | 25,681 |  |  | $ | 32,137 |  |  | $ | (1,928 | )
State |  |  | 5,840 |  |  |  | 6,592 |  |  |  | 1,369 |
|  |  | 31,521 |  |  |  | 38,729 |  |  |  | (559 | )
Deferred income tax expense (benefit) |  |  |  |  |  |  |  |  |
Federal |  |  | 11,484 |  |  |  | 86,703 |  |  |  | 3,878 |
State |  |  | (23 | ) |  |  | 12,567 |  |  |  | 1,067 |
|  |  | 11,461 |  |  |  | 99,270 |  |  |  | 4,945 |
Income tax expense |  | $ | 42,982 |  |  | $ | 137,999 |  |  | $ | 4,386 |
Significant components of CoreCivic's deferred tax assets and liabilities as of December 31, 2022 and 2021, are as follows (in thousands):
|  | December 31, |
|  | 2022 |  |  | 2021 |
Noncurrent deferred tax assets: |  |  |  |  |  |
Asset reserves and liabilities not yet deductible for tax |  | $ | 29,514 |  |  | $ | 37,612 |
Depreciation |  |  | 8,502 |  |  |  | 8,478 |
ROU lease assets |  |  | 33,226 |  |  |  | 41,440 |
Losses and tax credit carryforwards |  |  | 1,807 |  |  |  | 7,647 |
Intangible assets |  |  | 7,836 |  |  |  | 9,150 |
Other |  |  | 9,954 |  |  |  | 13,715 |
Total noncurrent deferred tax assets |  |  | 90,839 |  |  |  | 118,042 |
Less valuation allowance |  |  | (848 | ) |  |  | (6,352 | )
Total noncurrent deferred tax assets |  |  | 89,991 |  |  |  | 111,690 |
Noncurrent deferred tax liabilities: |  |  |  |  |  |
Depreciation |  |  | (148,255 | ) |  |  | (149,189 | )
Lease liabilities |  |  | (32,663 | ) |  |  | (40,900 | )
Intangible liabilities |  |  | (7,557 | ) |  |  | (8,532 | )
Other |  |  | (1,134 | ) |  |  | (1,226 | )
Total noncurrent deferred tax liabilities |  |  | (189,609 | ) |  |  | (199,847 | )
Net total noncurrent deferred tax liabilities |  | $ | (99,618 | ) |  | $ | (88,157 | )
A reconciliation of the income tax provision at the statutory income tax rate and the effective tax rate as a percentage of income from continuing operations before income taxes for the years ended December 31, 2022, 2021, and 2020 is as follows:
|  | 2022 |  |  | 2021 |  |  | 2020 |
Statutory federal rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
Revaluation of deferred tax liabilities |  |  | — |  |  |  | 132.7 |  |  |  | — |
Dividends paid deduction |  |  | — |  |  |  | — |  |  |  | (24.9 | )
State taxes, net of federal tax benefit |  |  | 3.4 |  |  |  | 4.8 |  |  |  | 1.9 |
Permanent differences |  |  | 1.7 |  |  |  | 2.8 |  |  |  | 2.2 |
Deferred tax expense on Kansas lease structure |  |  | — |  |  |  | — |  |  |  | 5.2 |
Tax benefit of equity-based compensation |  |  | — |  |  |  | 2.6 |  |  |  | 1.1 |
Other items, net |  |  | (0.1 | ) |  |  | (3.6 | ) |  |  | 0.8 |
|  |  | 26.0 | % |  |  | 160.3 | % |  |  | 7.3 | %
On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"). The CARES Act, among other things, includes provisions relating to the deferral of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The accelerated depreciation methods for qualified improvement property significantly reduced the Company's taxable income and, therefore, its distribution requirement as a REIT for 2020. During 2020, the Company deferred payment of $29.6 million of employer-side social security payments. Half of this deferred amount was paid in December 2021 while the remaining deferred amount was paid in September 2022. The CARES Act also incentivized companies to retain employees through an Employee Retention Credit ("ERC"). The ERC compensates employers for wages of employees that were retained and could not perform their job duties at 100% capacity as a result of coronavirus pandemic restrictions. In December 2020, the Consolidated Appropriations Act provided additional funding for the ERC with expanded benefits through June 30, 2021. During the year ended December 31, 2022, the Company recorded an ERC of $7.0 million which offset operating expenses. The credit was reduced by $1.8 million of federal income tax expense. The Inflation Reduction Act of 2022 (the "Inflation Reduction Act") was signed into law on August 16, 2022. Among other provisions, such act creates an excise tax of 1% on the fair value of net stock repurchases in excess of share issuances made by publicly traded U.S. corporations, effective for repurchases after December 31, 2022. The impact of this excise tax on the Company’s financial position, and/or liquidity, in future periods, will vary based on the level of net stock repurchases made by the Company in a given year. While the Company is still evaluating the potential impact of this excise tax on its results of operations, interpretive accounting guidance indicates that this tax likely can be recorded as a component of equity, as opposed to an expense within the statement of operations, given that it is a direct cost associated with the repurchase of the Company's common stock. CoreCivic had no liabilities for uncertain tax positions as of December 31, 2022 and 2021. CoreCivic recognizes interest and penalties related to unrecognized tax positions in income tax expense. CoreCivic does not currently anticipate that the total amount of unrecognized tax positions will significantly change in the next twelve months. CoreCivic's U.S. federal income tax returns for tax years 2019 through 2021 remain subject to examination by the Internal Revenue Service ("IRS"). The majority of states in which CoreCivic files income tax returns follow the same statute of limitations as the federal government. Certain states in which CoreCivic files income tax returns have statutes that remain open from 2018.

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 https://asc.fasb.org/extlink&oid=121826272&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 https://asc.fasb.org/extlink&oid=122134291&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 https://asc.fasb.org/extlink&oid=121826272&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 https://asc.fasb.org/extlink&oid=122134291&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 https://asc.fasb.org/extlink&oid=121826272&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 https://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 https://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 https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration