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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of income tax expense were:
| 2020 |  | 2019 |  | 2018
Current: |  |  |  |  |
Federal | $ | 11,349 |  |  | 7,577 |  |  | 14,485 |
State | 2,528 |  |  | 2,126 |  |  | 5,066 |
Deferred: |  |  |  |  |
Federal | (8,073) |  |  | (1,929) |  |  | (7,702) |
State | 2,576 |  |  | 680 |  |  | (1,784) |
| $ | 8,380 |  |  | 8,454 |  |  | 10,065 |
The following table reconciles income tax expense to the amount computed by applying the federal statutory rate to income before income taxes of $69,895, $32,081 and $48,832 in 2020, 2019 and 2018:
| 2020 |  | 2019 |  | 2018
Income tax at federal statutory rate | $ | 14,678 |  |  | 6,737 |  |  | 10,255 |
Increase (decrease) in taxes attributable to: |  |  |  |  |
State taxes, net of federal income tax benefit | 4,142 |  |  | 2,251 |  |  | 3,420 |
Uncertain tax positions | 1,351 |  |  | 323 |  |  | 24 |
Property flow-through | (9,215) |  |  | (2,054) |  |  | (839) |
Capitalized merger costs | (296) |  |  | 5,350 |  |  | — |
Tax reform - rate change impact on deferred taxes | — |  |  | 77 |  |  | — |
Reversal of excess deferred taxes recognized in regulatory liability | (2,912) |  |  | (2,355) |  |  | (1,383) |
Pension flow-through | 92 |  |  | (1,244) |  |  | — |
Stock-based compensation | (333) |  |  | (223) |  |  | (1,602) |
Other items, net | 873 |  |  | (408) |  |  | 190 |
| $ | 8,380 |  |  | 8,454 |  |  | 10,065 |
The components of the net deferred tax liability as of December 31 was as follows:
| 2020 |  | 2019
Deferred tax assets: |  |  |
Advances and contributions | $ | 22,573 |  |  | 19,547 |
Unamortized investment tax credit | 619 |  |  | 649 |
Pensions, postretirement benefits and stock-based compensation | 41,180 |  |  | 32,450 |
Debt premium, net | 6,290 |  |  | 7,002 |
California franchise tax | 756 |  |  | 456 |
Net operating loss | 550 |  |  | 1,046 |
Other | 6,792 |  |  | 7,211 |
Gross deferred tax assets | 78,760 |  |  | 68,361 |
Valuation allowance | — |  |  | (1,924) |
Total deferred tax assets | 78,760 |  |  | 66,437 |
Deferred tax liabilities: |  |  |
Utility plant | 209,541 |  |  | 211,079 |
Pension and postretirement | 31,227 |  |  | 22,263 |
Deferred gain and other-property | 5,875 |  |  | 5,872 |
Regulatory asset - business combinations debt premium, net | 6,290 |  |  | 7,002 |
Intangibles | 3,443 |  |  | 3,693 |
Deferred revenue | 297 |  |  | 1,962 |
Regulatory asset - income tax temporary differences, net | 1,195 |  |  | 295 |
Section 481(a) adjustments | 4,763 |  |  | 5,721 |
Other | 7,544 |  |  | 4,148 |
Total deferred tax liabilities | 270,175 |  |  | 262,035 |
Net deferred tax liabilities | $ | 191,415 |  |  | 195,598 |
Management evaluates the realizability of deferred tax assets based on all available evidence, both positive and negative. The realization of deferred tax assets is dependent on our ability to generate sufficient future taxable income during periods in which the deferred tax assets are expected to reverse. Based on all available evidence, management believes it is more likely than not that SJW Group will realize the benefits of its deferred tax assets. Accordingly, the valuation allowance relating to deferred tax assets acquired from CTWS was released in 2020 through purchase accounting adjustments made within the measurement period. Net operating loss carryforwards expire beginning in 2032 and ending in 2039. As of December 31, 2020, the estimated amount of net operating loss carryforwards available to offset future taxable income for Connecticut and Maine purposes are $29,555 and $1,087, respectively. SJW Group also acquired from the CTWS merger estimated state tax credit carryforwards of $1,033 which will expire beginning in 2021 and ending in 2040. The change in the net deferred tax liabilities of $4,183 in 2020 included other non-cash items primarily consisting of regulatory assets and liabilities relating to income tax temporary differences. The total amount of unrecognized tax benefits, before the impact of deductions for state taxes, excluding interest and penalties was $6,468 and $4,037 as of December 31, 2020 and 2019, respectively. The amount of tax benefits, net of any federal benefits for state taxes that would impact the effective rate, if recognized, is approximately $5,600 and $3,511 as of December 31, 2020 and 2019, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| 2020 |  | 2019 |  | 2018
Balance at beginning of year | $ | 3,834 |  |  | 1,382 |  |  | 1,307 |
Increase related to tax positions taken during the current year | 1,104 |  |  | 351 |  |  | — |
Increase related to tax positions taken during a prior year | 1,530 |  |  | 3,483 |  |  | 75 |
Reductions related to tax positions taken in a prior year | — |  |  | (1,382) |  |  | — |
Balance at end of year | $ | 6,468 |  |  | 3,834 |  |  | 1,382 |
The increase in gross unrecognized tax benefits in 2020 was primarily due to the uncertain tax position relating to repairs tax deductions. SJW Group’s policy is to classify interest and penalties associated with unrecognized tax benefits, if any, in tax expense. Accrued interest expense, net of the benefit of tax deductions which would be available on the payment of such interest, is approximately $107 as of December 31, 2020. SJW Group has not accrued any penalties for unrecognized tax benefits. The amount of interest recognized in 2020 was a increase to expense of $80. SJW Group does not foresee material changes to its gross uncertain tax liability within the next 12 months following December 31, 2020. On December 22, 2017 the Tax Act was signed into law. The Tax Act includes a number of changes in existing tax law impacting businesses including, among other things, a reduction in the corporate income tax rate from 35% to 21%. The rate reduction was effective on January 1, 2018. The lower tax rate benefits associated with regulatory operations governed by state public utility commissions are expected to flow back to customers with no impact to net income. The state public utility commissions have directed the water utilities to record the difference between the revenues collected under existing rates and the revenue that would have been collected had the existing rates been set using the new federal statutory income tax rate as a regulatory liability or to establish a memorandum account. In addition, the benefit of amortization of excess deferred income taxes created by the reduction of tax rate to 21% will flow back to the customers under current normalization rules and agreed upon methods with the commissions. On March 27, 2020 the CARES Act was signed into law and included several income tax provisions. The income tax provisions included modifications to net operating loss (“NOL”) usage limitations, net operating loss carrybacks, business interest expense limitations and timing of estimated tax payments. SJW Group has not generated NOLs in recent years and does not expect to generate a loss in 2020 so the CARES Act’s provisions related to carryback of losses are not applicable. The business interest limitation rules, including those changes under the CARES Act, under Section 163(j) are not applicable to the SJW Group’s regulated businesses. SJW Group has accounted for the applicable effects of the CARES Act. SJW Group files U.S. federal income tax returns and income tax returns in various states and is subject to ordinary statute of limitation of three years for federal and three or four years for different state returns. However, due to tax attribute carryforwards, SJW Group is subject to examination for tax years 2009 forward for federal and 2012 forward for state returns of CTWS and its subsidiaries. The statute of limitation for SJW Group returns is closed for these extended years and remains open for 2017 and forward for federal and 2016 or 2017 and forward for different states.

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- 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 http://asc.fasb.org/extlink&oid=84230637&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 http://asc.fasb.org/extlink&oid=116825942&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 http://asc.fasb.org/extlink&oid=84230637&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 http://asc.fasb.org/extlink&oid=116825942&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 http://asc.fasb.org/extlink&oid=84230637&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 http://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 http://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 http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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