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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Taxes [Abstract] |
Income Taxes | Income Taxes For financial statement purposes, earnings before income taxes by source was comprised of the following:
| Year Ended December 31,
(in thousands) | 2023 |  | 2022 |  | 2021
Domestic | $ | 38,375 |  |  | $ | 43,977 |  |  | $ | 176,042 |
Foreign | 14,492 |  |  | 17,494 |  |  | 18,262 |
Earnings before income taxes | $ | 52,867 |  |  | $ | 61,471 |  |  | $ | 194,304 |
A reconciliation of the federal statutory rate of 21% to the effective rate follows:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Tax at statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Stock compensation | 57.1 | % |  | 53.4 | % |  | 11.6 | %
State income taxes | 16.5 | % |  | 13.4 | % |  | 7.4 | %
Effect of foreign operations | 19.5 | % |  | 6.6 | % |  | 2.0 | %
Effect of current year credits | (9.9) | % |  | (13.2) | % |  | (2.4) | %
Change in unrecognized tax benefits | (6.9) | % |  | 0.1 | % |  | (2.8) | %
Other permanent differences | 1.7 | % |  | 0.9 | % |  | 0.3 | %
Prior year return to provision adjustments | 0.3 | % |  | 1.7 | % |  | (0.2) | %
Valuation allowance | 11.4 | % |  | (3.0) | % |  | (7.1) | %
Other, net | (0.9) | % |  | (1.0) | % |  | 0.8 | %
Effective income tax rate | 109.8 | % |  | 79.9 | % |  | 30.6 | %
The components of income tax expense (benefit) are as follows:
| Year Ended December 31,
(in thousands) | 2023 |  | 2022 |  | 2021
Current expense (benefit) |  |  |  |  |
Federal | $ | 58,480 |  |  | $ | 62,878 |  |  | $ | (7,398) |
State | 9,644 |  |  | 21,473 |  |  | 15,106 |
Foreign | 4,385 |  |  | 4,570 |  |  | 3,690 |
Total current | 72,509 |  |  | 88,921 |  |  | 11,398 |
Deferred (benefit) expense |  |  |  |  |
Federal | (28,084) |  |  | (25,923) |  |  | 56,716 |
State | 1,316 |  |  | (13,321) |  |  | (1,205) |
Foreign | 12,305 |  |  | (563) |  |  | (7,545) |
Total deferred | (14,463) |  |  | (39,807) |  |  | 47,966 |
Total income tax expense | $ | 58,046 |  |  | $ | 49,114 |  |  | $ | 59,364 |
Deferred tax assets (liabilities) consist of the following:
| December 31,
(in thousands) | 2023 |  | 2022
Deferred tax assets |  |  |
Net operating loss carryforwards | $ | 20,852 |  |  | $ | 27,059 |
Accrued liabilities | 64,410 |  |  | 55,527 |
Intangible assets | 143,386 |  |  | 155,238 |
Lease obligations | 79,645 |  |  | 81,412 |
Other assets | 4,082 |  |  | 8,804 |
Foreign tax credit carryforwards | 856 |  |  | 2,991 |
Total deferred tax assets | 313,231 |  |  | 331,031 |
Valuation allowance | (9,340) |  |  | (3,158) |
Deferred tax assets, net | 303,891 |  |  | 327,873 |
Deferred tax liabilities |  |  |
Rental merchandise | (212,137) |  |  | (236,381) |
Property assets | (2,089) |  |  | (16,415) |
Lease assets | (77,825) |  |  | (79,725) |
Other liabilities | (650) |  |  | (452) |
Total deferred tax liabilities | (292,701) |  |  | (332,973) |
Net deferred taxes | $ | 11,190 |  |  | $ | (5,100) |
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. At December 31, 2023, we had net operating loss carryforwards of approximately $163 million for state, none for federal and $41 million for foreign jurisdictions. After review of the evidence generated during the year, we have determined that a valuation allowance is required against Mexico net operating losses due to the forecasted expiration of net operating losses. A valuation allowance is also required related to certain tax credits. State net operating losses were also partially offset by a valuation allowance. We also had federal, state and foreign tax credit carryforwards of approximately $3.9 million of which a portion has been offset by a valuation allowance. The net operating losses and credits will expire in various years between 2024 and 2042. 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 state revenue authorities for the fiscal years 2013 through 2020. The following is a summary of all tax years that are open to examination. •U.S. Federal - 2020 and forward •U.S. States - 2013 and forward •Foreign - 2018 and forward We do not anticipate that adjustments as a result of these audits, if any, will have a material impact to our Consolidated Statements of Operations, Consolidated Balance Sheets, and statement of cash flows or earnings per share. A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:
| Year Ended December 31,
(in thousands) | 2023 |  | 2022 |  | 2021
Beginning unrecognized tax benefit balance | $ | 5,100 |  |  | $ | 6,536 |  |  | $ | 22,184 |
Additions based on tax positions related to current year | 97 |  |  | 14 |  |  | 461 |
Reductions based on tax positions related to current year | — |  |  | (488) |  |  | — |
Additions for tax positions of prior years | 759 |  |  | 21 |  |  | 4,119 |
Reductions for tax positions of prior years | (4,735) |  |  | (983) |  |  | (3,006) |
Settlements | — |  |  | — |  |  | (17,222) |
Ending unrecognized tax benefit balance | $ | 1,221 |  |  | $ | 5,100 |  |  | $ | 6,536 |
Included in the balance of unrecognized tax benefits at December 31, 2023, is $0.9 million, net of federal benefit, which, if ultimately recognized, will affect our annual effective tax rate. During the year ended December 31, 2023, we recorded interest expense of $3.1 million for remaining uncertain tax positions, partially offset by $1.0 million of interest income primarily related to the reversal of the accrual of interest for matters settled during the year in our favor, both of which are excluded from the reconciliation of unrecognized tax benefits presented above.

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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 -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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