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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes

17. Income Taxes

Provision for income taxes from continuing operations consists of the following for the periods presented (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Current:

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

63,041

 

 

$

48,292

 

 

$

(18,215

)

State

 

 

13,769

 

 

 

6,715

 

 

 

4,981

 

Foreign

 

 

755

 

 

 

778

 

 

 

732

 

Total current

 

 

77,565

 

 

 

55,785

 

 

 

(12,502

)

Deferred:

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

 

9,808

 

 

 

13,339

 

 

 

46,442

 

State

 

 

6,377

 

 

 

(1,892

)

 

 

564

 

Foreign

 

 

360

 

 

 

325

 

 

 

6,102

 

Total deferred provision

 

 

16,545

 

 

 

11,772

 

 

 

53,108

 

Provision for income taxes

 

$

94,110

 

 

$

67,557

 

 

$

40,606

 

 

 

A reconciliation of the U.S. federal statutory rate to the effective tax rate is as follows for the periods presented:

 

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

U.S. federal statutory rate on income before income

   taxes

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

Impact of foreign operations

 

 

(0.1

)

 

 

1.7

 

 

 

(0.5

)

Effects of statutory rate change

 

 

—

 

 

 

—

 

 

 

3.2

 

State income taxes, net of federal tax effect

 

 

4.7

 

 

 

3.9

 

 

 

5.1

 

Permanent differences

 

 

0.1

 

 

 

1.7

 

 

 

1.5

 

Change in valuation allowance

 

 

0.2

 

 

 

(2.8

)

 

 

127.4

 

Unrecognized tax benefit release

 

 

—

 

 

 

(0.9

)

 

 

(0.4

)

Federal tax credits

 

 

(0.6

)

 

 

(0.8

)

 

 

(1.0

)

Basis recognition related to foreign divestiture

 

 

—

 

 

 

—

 

 

 

(129.9

)

CARES Act impacts to net operating losses

 

 

—

 

 

 

—

 

 

 

(4.5

)

Other

 

 

(0.1

)

 

 

0.7

 

 

 

0.2

 

Effective income tax rate

 

 

25.2

%

 

 

24.5

%

 

 

22.1

%

 

For the year ended December 31, 2022, the provision for income taxes was $94.1 million, reflecting an effective tax rate of 25.2%, compared to $67.6 million, reflecting an effective tax rate of 24.5%, for the year ended December 31, 2021.

 

The domestic and foreign components of income from continuing operations before income taxes for continuing operations are as follows (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Foreign

 

$

5,420

 

 

$

5,596

 

 

$

9,904

 

Domestic

 

 

368,723

 

 

 

270,164

 

 

 

173,893

 

Income from continuing operations before income taxes

 

$

374,143

 

 

$

275,760

 

 

$

183,797

 

 

 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities of the Company at December 31, 2022 and December 31, 2021 were as follows (in thousands):

 

 

 

December 31,

 

 

 

2022

 

 

2021

 

Deferred tax assets:

 

 

 

 

 

 

 

 

Net operating losses and tax credit

   carryforwards – federal and state

 

$

7,333

 

 

$

9,354

 

Capital loss carryovers

 

 

215,745

 

 

 

215,367

 

Bad debt allowance

 

 

1,148

 

 

 

1,083

 

Accrued compensation and severance

 

 

18,784

 

 

 

18,241

 

Insurance reserves

 

 

20,924

 

 

 

18,847

 

Leases

 

 

862

 

 

 

896

 

Accrued expenses

 

 

—

 

 

 

5,768

 

Interest carryforwards

 

 

2,639

 

 

 

3,396

 

Lease right-of-use liabilities

 

 

26,277

 

 

 

26,154

 

Fixed asset basis difference

 

 

2,128

 

 

 

—

 

Other assets

 

 

8,987

 

 

 

8,066

 

Total gross deferred tax assets

 

 

304,827

 

 

 

307,172

 

Less: valuation allowance

 

 

(217,705

)

 

 

(217,325

)

Deferred tax assets

 

 

87,122

 

 

 

89,847

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Fixed asset basis difference

 

 

—

 

 

 

(2,456

)

Prepaid items

 

 

(3,714

)

 

 

(2,882

)

Accrued expenses

 

 

(5,713

)

 

 

—

 

Intangible assets

 

 

(139,843

)

 

 

(126,446

)

Lease right-of-use assets

 

 

(24,960

)

 

 

(24,660

)

Investment in foreign subsidiary

 

 

(2,530

)

 

 

(4,691

)

Total deferred tax liabilities

 

 

(176,760

)

 

 

(161,135

)

Total net deferred tax liability

 

$

(89,638

)

 

$

(71,288

)

 

 The Company records a valuation allowance to reduce its net deferred tax assets to the amount that is more likely than not to be realized. At December 31, 2022 and 2021, the Company carried a valuation allowance against deferred tax assets of $217.7 million and $217.3 million, respectively. These amounts are primarily related to deferred tax assets related to the Company’s capital loss carryforward resulting from the U.K. Sale and certain state net operating losses. If the capital loss carryforward is not utilized, it will begin to expire in 2026.

As of December 31, 2022 and 2021, the Company had no federal net operating loss carryforwards. The foreign net operating loss carryforwards at December 31, 2022 and 2021 are approximately $0.1 million and $0.1 million, respectively, and have no expiration.

The Company has state net operating loss carryforwards at December 31, 2022 and 2021 of approximately $191.5 million and $227.3 million, respectively. These net operating loss carryforwards, if not used to offset future taxable income, will expire from 2023 to 2036. In addition, the Company has certain state tax credits of $0.2 million which will begin to expire in 2030 if not utilized.

Income taxes receivable was $28.9 million and $24.6 million at December 31, 2022 and 2021, respectively. At December 31, 2022 and 2021, $23.1 million of income taxes receivable has been included in other assets due to anticipated delays in receipt of income tax refunds associated with amended tax return filings. The remaining $5.8 million and $1.5 million of income taxes receivable is included in other current assets in the December 31, 2022 and 2021 consolidated balance sheet, respectively. Income taxes payable of $1.3 million and $5.5 million at December 31, 2022 and 2021, respectively, was included in other accrued liabilities in the consolidated balance sheets.

The Company did not record any amounts related to unrecognized tax benefits at December 31, 2022 or 2021. The Company’s accounting policy is to record any interest and penalties as a component of income tax expense, when applicable. A reconciliation of the beginning and ending amount of unrecognized income tax benefits, exclusive of any interest and penalties, net of the federal benefit, is as follows (in thousands):

 

 

 

2021

 

Balance at January 1

 

$

2,060

 

Additions based on tax positions related to the

   current year

 

 

—

 

Reductions as a result of the lapse of applicable

   statutes of limitations and settlements with tax authorities

 

 

(2,060

)

Balance at December 31

 

$

—

 

 

The Company and its subsidiaries file income tax returns in federal and in many state and local jurisdictions as well as foreign jurisdictions. The Company may be subject to examination by the Internal Revenue Service (“IRS”) for calendar years 2019 through 2021. Additionally, any net operating losses that were generated in prior years and utilized in these years may also be subject to examination by the IRS. While no foreign jurisdictions are presently under examination, the Company may be subject to examination for calendar years 2018 through 2021. Generally, for state tax purposes, the Company’s 2017 through 2021 tax years remain open for examination by the tax authorities. At the date of this report, there were no audits or inquires that had progressed sufficiently to predict their ultimate outcome.