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Income Taxes (Notes)
 12 Months Ended
Dec. 31, 2022
Income Taxes [Abstract]  
Income Taxes [Text Block] Income Taxes
For financial statement purposes, earnings before income taxes by source was comprised of the following:
 Year Ended December 31,
(In thousands)202220212020
Domestic$43,977 $176,042 $212,859 
Foreign17,494 18,262 9,920 
Earnings before income taxes$61,471 $194,304 $222,779 
A reconciliation of the federal statutory rate of 21% to the effective rate follows:
Year Ended December 31,
202220212020
Tax at statutory rate21.0 %21.0 %21.0 %
Stock compensation53.4 %11.6 %— %
State income taxes13.4 %7.4 %2.8 %
Effect of foreign operations6.6 %2.0 %(0.3)%
Effect of current and prior year credits(13.2)%(2.4)%(0.8)%
Change in unrecognized tax benefits0.1 %(2.8)%0.3 %
Other permanent differences0.9 %0.3 %(0.7)%
Prior year return to provision adjustments1.7 %(0.2)%1.1 %
Benefit of CARES Act— %— %(7.5)%
Valuation allowance(3.0)%(7.1)%(9.3)%
Other, net(1.0)%0.8 %— %
Effective income tax rate79.9 %30.6 %6.6 %
The components of income tax expense (benefit) are as follows:
 Year Ended December 31,
(In thousands)202220212020
Current expense (benefit)
Federal$62,878 $(7,398)$14,354 
State21,473 15,106 4,735 
Foreign4,570 3,690 1,608 
Total current88,921 11,398 20,697 
Deferred (benefit) expense
Federal(25,923)56,716 12,576 
State(13,321)(1,205)(2,956)
Foreign(563)(7,545)(15,653)
Total deferred(39,807)47,966 (6,033)
Total income tax expense$49,114 $59,364 $14,664 
Deferred tax assets (liabilities) consist of the following:
 December 31,
(In thousands)20222021
Deferred tax assets
Net operating loss carryforwards$27,059 $35,834 
Accrued liabilities55,527 48,659 
Intangible assets155,238 165,135 
Lease obligations81,412 73,819 
Other assets including credits8,804 12,157 
Foreign tax credit carryforwards2,991 7,696 
Total deferred tax assets331,031 343,300 
Valuation allowance(3,158)(7,688)
Deferred tax assets, net327,873 335,612 
Deferred tax liabilities
Rental merchandise(236,381)(288,504)
Property assets(16,415)(20,094)
Lease assets(79,725)(72,458)
Other liabilities(452)(108)
Total deferred tax liabilities(332,973)(381,164)
Net deferred taxes$(5,100)$(45,552)
At December 31, 2022, we had net operating loss carryforwards of approximately $194 million for state, none for federal and $58 million for foreign jurisdictions. State net operating losses were partially offset by a valuation allowance. We also had federal, state and foreign tax credit carryforwards of approximately $8.3 million of which a portion has been offset by a valuation allowance. The net operating losses and credits will expire in various years between 2023 and 2041.
We file income tax returns in the U.S. and multiple foreign jurisdictions with varying statutes of limitations. In the normal course of business, we are subject to examination by various taxing authorities. We are currently under examination by certain Federal and state revenue authorities for the fiscal years 2012 through 2020. The following is a summary of all tax years that are open to examination.
•U.S. Federal - 2013 and forward
•U.S. States - 2011 and forward
•Foreign - 2013 and forward
We do not anticipate that adjustments as a result of these audits, if any, will have a material impact to our Consolidated Statement of Operations, Consolidated Balance Sheets, and statement of cash flows or earnings per share.
As of each reporting date, our management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred tax assets. After review of the positive evidence generated during the year, we have determined no valuation allowance is required against Mexico net operating losses. A valuation allowance is still required related to certain tax credits and certain state net operating losses.
A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:
Year Ended December 31,
(In thousands)202220212020
Beginning unrecognized tax benefit balance$6,536 $22,184 $24,208 
Additions (reductions) based on tax positions related to current year(474)461 1,204 
Additions for tax positions of prior years21 4,119 45 
Reductions for tax positions of prior years(983)(3,006)(2,086)
Settlements— (17,222)(1,187)
Ending unrecognized tax benefit balance$5,100 $6,536 $22,184 
Included in the balance of unrecognized tax benefits at December 31, 2022, is $1.4 million, net of federal benefit, which, if ultimately recognized, will affect our annual effective tax rate.
During the year ended December 31, 2022, we recorded $0.3 million of interest income primarily related to the reversal of the accrual of interest for matters settled during the year in our favor, partially offset by interest expense of $0.3 million for remaining uncertain tax positions, both of which are excluded from the reconciliation of unrecognized tax benefits presented above.
The effect of the tax rate change for items originally recognized in other comprehensive income was properly recorded in tax expense from continuing operations. This results in stranded tax effects in accumulated other comprehensive income at December 31, 2022. Companies can make a policy election to reclassify from accumulated other comprehensive income to retained earnings the stranded tax effects directly arising from the change in the federal corporate tax rate. We did not exercise the option to reclassify stranded tax effects within accumulated other comprehensive income in each period in which the effect of the change in the U.S. federal corporate income tax rate resulting from the Tax Cuts and Jobs Act of 2017 was recorded.