Income Taxes (Notes)

12 Months Ended

Dec. 31, 2020


7.			Income Taxes

Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the net deferred tax assets as reflected on the Consolidated Balance Sheets are as follows:


	December 31,
(in thousands)	2020		2019

Deferred tax liabilities
Prepaid assets	$	(4,207)	$	(4,252)
Depreciation	(4,941)		(4,564)
Software development costs	(8,230)		(6,475)
Tenant improvements	(3,702)		(3,209)
Right-of-use leased assets	(17,322)		(15,949)
Intangibles	(1,444)		(955)
Total deferred tax liabilities	(39,846)		(35,404)

Deferred tax assets
Accrued incentive compensation	5,092		5,946
Net operating loss carryforward	558		632
Workers’ compensation accruals	6,310		5,404
Accrued rent	1,553		1,223
Stock-based compensation	11,383		6,712
Operating lease liabilities	21,024		19,158
Minority investment impairment	676		673
Cares act deferral	3,235		—
Other	294		287
Total deferred tax assets	50,125		40,035
Valuation allowance	(676)		(675)
Total net deferred tax assets	49,449		39,360

Net deferred tax assets	$	9,603	$	3,956

The components of income tax expense are as follows:


	Year Ended December 31,
(in thousands)	2020		2019		2018

Current income tax expense
Federal	$	45,558	$	27,385	$	40,347
State	11,122		6,299		11,133
Total current income tax expense	56,680		33,684		51,480

Deferred income tax (benefit) expense
Federal	(4,678)		4,016		(3,398)
State	(969)		844		(1,135)
Total deferred income tax (benefit) expense	(5,647)		4,860		(4,533)
Total income tax expense	$	51,033	$	38,544	$	46,947

In 2016, we prospectively adopted ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. We recognized an income tax benefit of $2.1 million in 2020, $14.6 million in 2019 and $3.9 million in 2018 related to excess tax benefits from the vesting of equity compensation.

The reconciliation of income tax expense computed at U.S. federal statutory tax rates to the reported income tax expense from continuing operations is as follows:


	Year Ended December 31,
(in thousands)	2020		2019		2018

Expected income tax expense at 21%	$	39,747	$	39,825	$	38,296
State income taxes, net of federal benefit	7,818		5,821		7,660
Nondeductible expenses	3,641		5,959		4,831

Equity compensation, net	1,335		(12,120)		(2,737)
Research and development credit	(1,479)		(1,069)		(856)


Other, net	(29)		128		(247)
Reported total income tax expense	$	51,033	$	38,544	$	46,947

At December 31, 2020, we have net operating loss carryforwards totaling $2.2 million that expire from 2023 to 2030 related to an acquisition that occurred in 2010.

We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2020, 2019 and 2018, we made no provisions for interest or penalties related to uncertain tax positions. The tax years 2017 through 2019 remain open to examination by the Internal Revenue Service of the United States. The tax years 2016 through 2019 remain open to examination by various state tax authorities.

- 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.

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