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Income Taxes
 12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes
14.
Income Taxes:
The components of the income tax provision (benefit) are as follows (in thousands):
 
    
December 31,
  
    
2020
     
2019
     
2018
  
Federal:
                           
Current
    $ (16,610 )     $ 63,697      $ 65,403  
Deferred
      28,719        (45,660 )       (29,667 ) 
    
 
 
     
 
 
     
 
 
  
       12,109        18,037        35,736  
    
 
 
     
 
 
     
 
 
  
State:
                           
Current
      (2,954 )       8,561        15,185  
Deferred
      7,573        (10,022 )       (6,227 ) 
    
 
 
     
 
 
     
 
 
  
       4,619        (1,461 )       8,958  
    
 
 
     
 
 
     
 
 
  
Total
    $ 16,728      $ 16,576      $ 44,694  
    
 
 
     
 
 
     
 
 
  
The Company files its tax return on a consolidated basis with its subsidiaries, and its affiliated professional contractors file tax returns on an individual basis.
The effective tax rate for continuing operations was 234.0%, 28.2% and 26.9% for the years ended December 31, 2020, 2019 and 2018, respectively. The increase in the effective tax rate for the year ended December 31, 2020 as compared to the years ended December 31, 2019 and 2018 was due to a significant reduction in pre-tax income as a result of the impacts from the transformational and restructuring related expenses and
COVID-19.
The differences between the effective rate and the United States federal income tax statutory rate are as follows:
 
                         
    
December 31,
  
    
2020
    
2019
    
2018
  
Tax at statutory rate
     
21.00
 %     
21.00
 %     
21.00
 % 
State income tax, net of federal benefit
     
24.34
      
6.45
      
4.41
  
Non-deductible expenses
     
60.44
      
3.98
      
0.85
  
Equity compensation adjustments
     
98.61
      
6.45
      
0.78
  
Change in accrual estimates relating to uncertain tax positions
     
4.22
      
(9.63
 )     
(0.84
 ) 
Change in valuation allowance
     
23.67
      
0.39
       —    
Other, net
     
1.71
      
(0.45
 )     
1.42
  
Change in tax law
      —         —        
(0.71
 ) 
    
 
 
    
 
 
    
 
 
  
Income tax provision
     
233.99
 %     
28.19
 %     
26.91
 % 
    
 
 
    
 
 
    
 
 
  
All of the Company’s deferred tax assets and liabilities are classified as long-term. The significant components of deferred income tax assets and liabilities are as follows (in thousands):
 
                 
    
December 31,
  
    
2020
     
2019
  
Allowance for uncollectible accounts
    $
79,755
      $
170,123
  
Reserves and accruals
     
64,445
       
54,685
  
Stock-based compensation
     
7,517
       
11,493
  
Operating loss and other carryforwards
     
16,767
       
6,691
  
Capital loss carryforwards
     
447,854
       
17,082
  
Operating lease assets
     
15,042
       
15,389
  
Property and equipment
     
3,044
       
3,986
  
Other
     
571
        —    
    
 
 
     
 
 
  
Deferred tax assets before valuation allowance
     
634,995
       
279,449
  
Less: Valuation allowance
     
(458,708
 )      
(19,286
 ) 
    
 
 
     
 
 
  
Deferred tax assets, net of valuation allowance
     
176,287
       
260,163
  
    
 
 
     
 
 
  
Gross deferred tax liabilities:
                  
Amortization
     
(152,969
 )      
(144,587
 ) 
Accounting method changes
     
(16,352
 )      
(71,532
 ) 
Operating lease liabilities
     
(14,057
 )      
(13,405
 ) 
Other
     
(183
 )      
(463
 ) 
    
 
 
     
 
 
  
Total deferred tax liabilities
     
(183,561
 )      
(229,987
 ) 
    
 
 
     
 
 
  
 
Net deferred tax (liabilities) assets
    $
(7,274
 )     $
30,176
  
    
 
 
     
 
 
  
The Company’s net deferred tax liabilities were $7.3 million as of December 31, 2020, as compared to net deferred tax assets of $30.2 million at December 31, 2019. The increase in net deferred tax liabilities of $37.5 million during the year ended December 31, 2020 was primarily related to a decrease in deferred tax assets related to allowance for uncollectible accounts partially offset by decrease in deferred tax liabilities for accounting method changes.
For the years ended December 31, 2020, 2019 and 2018, income tax expense of $7.1 million, $3.8 million and $1.3 million, respectively, was recognized for excess tax deficiencies.
For
the year ended December 31, 2020, the Company estimates that it will generate a $1.7
billion capital loss, from the sale of its anesthesiology services medical group, which will expire in 2025. Total capital loss carryforwards as of December 31, 2020 was
 $1.8 billion. As of December 31,
 
2020, management has determined that it is more likely than not that the tax benefits related to these carryforwards will not be realized and has recorded a full valuation allowance against the related deferred tax assets. Additionally, the Company has net operating loss carryforwards for federal and state
 
tax purposes totaling $35.4 million, $31.5 million and $27.8 million at December 31, 2020, 2019 and 2018, respectively. With respect to the December 31, 2020 balance, $22.3 million expires at various times from 2022 through 2040, and $13.1 million does not expire.
As of December 31, 2020, 2019 and 2018, the Company’s liability for uncertain tax positions, excluding accrued interest and penalties, was
 

$6.2 million, $7.4 million and $11.2 million, respectively. As of December 31, 2020, the Company had $6.2 million of uncertain tax positions that, if recognized, would favorably impact its effective tax rate.
The following table summarizes the activity related to the Company’s liability for uncertain tax positions for the years ended December 31, 2020, 2019 and 2018 (in thousands):
 
                         
    
Years Ended December 31,
  
    
2020
     
2019
     
2018
  
Balance at beginning of year
    $
7,409
      $
11,185
      $
10,972
  
Increases related to prior year tax positions
     
—
  		       
369
       
385
  
Decreases related to prior year tax positions
     
(1,041
 )       —         
—
  		  
Increases related to current year tax positions
     
100
       
1,700
       
2,900
  
Decreases related to divestitures
     
(300
 )       —          —    
Decreases related to lapse of statutes of limitation
     
—
  		       
(5,845
 )      
(3,072
 ) 
    
 
 
     
 
 
     
 
 
  
Balance at end of year
    $
6,168
      $
7,409
      $
11,185
  
    
 
 
     
 
 
     
 
 
  
During the year ended December 31, 2020, the Company decreased its liability for uncertain tax positions by $1.2 million, primarily related to a reduction in tax liability for prior year positions. During the year ended December 31, 2019, the Company decreased its liability for uncertain tax positions by $3.8 million, primarily related to expiration of statutes of limitation, partially offset by additional taxes on current and prior year positions. In addition, the Company anticipates that its liability for uncertain tax positions will decrease by $1.1 million over the next 12 months.
The Company includes interest and penalties related to income tax liabilities in income tax expense. During the year ended December 31, 2020, the Company included $0.5 million of interest and penalties in income tax expense. The impact to income tax expense related to penalties and interest was not material during the years
ended
December 31,
 
2019 and 2018. At December 31, 2020 and 2019, the Company’s accrued liability for interest and penalties related to income tax liabilities totaled $1.0 million and $0.6 million, respectively.
The Company is currently subject to U.S. Federal and various state income tax examinations for the tax years 2015 through 2019.