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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

19. Income Taxes

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

 

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Current:

 

 

 

 

 

 

 

 

 

Federal

 

$

6,133

 

 

$

68,939

 

 

$

63,041

 

State

 

 

2,932

 

 

 

14,413

 

 

 

13,769

 

Foreign

 

 

622

 

 

 

933

 

 

 

755

 

Total current provision

 

 

9,687

 

 

 

84,285

 

 

 

77,565

 

Deferred:

 

 

 

 

 

 

 

 

 

Federal

 

 

63,534

 

 

 

(72,046

)

 

 

9,808

 

State

 

 

3,806

 

 

 

(22,495

)

 

 

6,377

 

Foreign

 

 

368

 

 

 

557

 

 

 

360

 

Total deferred provision

 

 

67,708

 

 

 

(93,984

)

 

 

16,545

 

Provision for (benefit from) income taxes

 

$

77,395

 

 

$

(9,699

)

 

$

94,110

 

 

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,

 

 

 

2024

 

 

2023

 

 

2022

 

U.S. federal statutory rate on income before income
   taxed

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

Impact of foreign operations

 

 

0.1

 

 

 

(2.2

)

 

 

(0.1

)

State income taxes, net of federal tax effect

 

 

2.0

 

 

 

45.6

 

 

 

4.7

 

Nondeductible expenses and permanent differences

 

 

1.3

 

 

 

(30.7

)

 

 

0.4

 

Change in valuation allowance

 

 

(0.3

)

 

 

(0.1

)

 

 

0.2

 

Unrecognized tax benefit

 

 

0.2

 

 

 

(14.8

)

 

 

—

 

Federal tax credits

 

 

(1.6

)

 

 

9.8

 

 

 

(0.6

)

Noncontrolling interest

 

 

(0.6

)

 

 

7.4

 

 

 

(0.4

)

Other

 

 

0.5

 

 

 

2.2

 

 

 

—

 

Effective income tax rate

 

 

22.6

%

 

 

38.2

%

 

 

25.2

%

For the year ended December 31, 2024, the provision for income taxes was $77.4 million, reflecting an effective tax rate of 22.6%, compared to benefit from income taxes of $(9.7) million, reflecting an effective tax rate of 38.2%, for the year ended December 31, 2023. The Company’s higher pre-tax results for the year yields lower volatility in the items impacting the effective tax rate for the year ended December 31, 2024 when compared to prior periods.

The domestic and foreign components of income (loss) before income taxes are as follows (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Foreign

 

$

3,472

 

 

$

5,889

 

 

$

5,420

 

Domestic

 

 

338,407

 

 

 

(31,249

)

 

 

368,723

 

Income (loss) before income taxes

 

$

341,879

 

 

$

(25,360

)

 

$

374,143

 

 

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, 2024 and December 31, 2023 were as follows (in thousands):

 

 

 

December 31,

 

 

 

2024

 

 

2023

 

Deferred tax assets:

 

 

 

 

 

 

Net operating losses and tax credit
   carryforwards – federal and state

 

$

19,853

 

 

$

5,729

 

Capital loss carryovers

 

 

217,100

 

 

 

215,175

 

Bad debt allowance

 

 

1,830

 

 

 

1,780

 

Accrued compensation and severance

 

 

18,534

 

 

 

18,250

 

Insurance reserves

 

 

22,706

 

 

 

17,343

 

Leases

 

 

1,039

 

 

 

948

 

Accrued expenses

 

 

—

 

 

 

1,091

 

Accrued Desert Hills settlement

 

 

—

 

 

 

104,636

 

Interest carryforward

 

 

25,131

 

 

 

2,430

 

Lease right-of-use liabilities

 

 

28,697

 

 

 

29,781

 

Fixed asset basis difference

 

 

14,374

 

 

 

10,480

 

Other assets

 

 

3,660

 

 

 

1,564

 

Total gross deferred tax assets

 

 

352,924

 

 

 

409,207

 

Less: valuation allowance

 

 

(218,129

)

 

 

(217,137

)

Deferred tax assets

 

 

134,795

 

 

 

192,070

 

Deferred tax liabilities:

 

 

 

 

 

 

Prepaid items

 

 

(5,321

)

 

 

(4,609

)

Accrued expenses

 

 

(1,813

)

 

 

—

 

Intangible assets

 

 

(161,934

)

 

 

(152,284

)

Lease right-of-use assets

 

 

(26,819

)

 

 

(27,800

)

Investment in foreign subsidiary

 

 

(1,890

)

 

 

(2,650

)

Total deferred tax liabilities

 

 

(197,777

)

 

 

(187,343

)

Total net deferred tax asset (liability)

 

$

(62,982

)

 

$

4,727

 

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, 2024 and 2023, the Company carried a valuation allowance against deferred tax assets of $218.1 million and $217.1 million, respectively. These amounts are primarily related to the Company’s capital loss carryforward resulting from the 2021 sale of the Company’s operations in the United Kingdom and certain state net operating losses. If the capital loss carryforward is not utilized, it will expire in 2026.

The Company has state net operating loss carryforwards at December 31, 2024 and 2023 of approximately $546.7 million and $175.9 million, respectively. A portion of these net operating loss carryforwards, if not utilized, will begin to expire in 2027, while some have an indefinite carryforward period. In addition, the Company has certain state tax credits of $1.8 million which will begin to expire in 2042 if not utilized.

Income taxes receivable was $31.9 million and $12.4 million at December 31, 2024 and 2023, respectively, and is recorded within other current assets on the consolidated balance sheets.

The Company has recorded liabilities related to unrecognized tax benefits of $7.2 million and $4.0 million at December 31, 2024 and 2023, respectively. These amounts are inclusive of interest and penalties of $2.2 million and $0.9 million, respectively, and are included in other liabilities on the consolidated balance sheets. The amount of unrecognized tax benefit, if realized, that would affect the effective tax rate is $6.9 million and $3.8 million at December 31, 2024 and December 31, 2023, respectively. A reconciliation of the beginning and ending amount of unrecognized income tax benefits, exclusive of any interest and penalties, is as follows (in thousands):

 

 

2024

 

2023

 

2022

 

Balance at January 1

$

3,089

 

$

—

 

$

—

 

Additions based on tax positions related to the current year

 

—

 

 

—

 

 

—

 

Additions for tax positions of prior years

 

1,918

 

 

3,089

 

 

—

 

Reductions as a result of the lapse of applicable
   statutes of limitations

 

—

 

 

—

 

 

—

 

Balance at December 31

$

5,007

 

$

3,089

 

$

—

 

 

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 tax years after 2020. 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 tax years after 2019. Generally, for state tax purposes, the Company’s tax years after 2019 remain open for examination by the tax authorities. At the date of this report, there were no material audits or inquiries that had progressed sufficiently to predict their ultimate outcome.