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Income Taxes
 12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income before income taxes are as follows:
 Years ended December 31,
 20202019
 (in thousands)
United States$16,990 $88,182 
Foreign346 699 
Income before income taxes$17,336 $88,881 
The components of income tax expense for the years ended December 31, 2020 and 2019 were as follows:
 FederalStateForeignTotal
 (in thousands)
2020    
Current$— $(88)$723 $635 
Deferred6,251 702 — 6,953 
Total$6,251 $614 $723 $7,588 
2019
Current$— $722 $163 $885 
Deferred20,205 869 — 21,074 
Total$20,205 $1,591 $163 $21,959 
The following is a reconciliation of the federal income tax expense at the statutory rate of 21% for the years ended December 31, 2020 and 2019 to the effective income tax expense:
 Years Ended December 31,
 20202019
 (in thousands)
Statutory federal income tax expense$3,640 $18,665 
State taxes, net of federal benefit633 1,440 
Foreign tax paid— — 
Foreign jurisdiction rate differential508 475 
Permanent differences-nondeductible executive compensation2,748 2,083 
Permanent differences and other59 (704)
Effective income tax expense$7,588 $21,959 
The Company records tax expense or benefit for unusual or infrequent items discretely in the period in which they occur.
The following table summarizes the activity related to the Company’s unrecognized tax benefits:
 (in thousands)
Balance as of December 31, 2018$182 
Increases related to current year tax positions250 
Decreases due to tax positions expired(162)
Balance as of December 31, 2019270 
Increases related to current year tax positions66 
Decreases due to tax positions expired(6)
Balance as of December 31, 2020$330 
A $0.3 million and $0.2 million reserve was established as of December 31, 2020 and 2019, respectively, for the exposure in Europe. If the Company is able to eventually recognize these uncertain tax positions, all of the unrecognized benefit would reduce the Company’s effective tax rate.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:
 As of December 31,
 20202019
 (in thousands)
Deferred tax assets:  
Unearned lease revenue$2,519 $1,277 
State taxes10 152 
Inventory2,153 — 
Reserves and allowances4,356 1,988 
Other accruals1,769 4,974 
Foreign tax credit— 19 
Lease liability198 271 
Net operating loss carry forward74,045 12,091 
California alternative minimum tax credit33 — 
Charitable contributions65 57 
Total deferred tax assets85,148 20,829 
Less: valuation allowance(468)(153)
Net deferred tax assets84,680 20,676 
Deferred tax liabilities:
Depreciation and impairment on aircraft engines and equipment(163,773)(118,595)
Inventory— (2,350)
Notes receivable(34,426)(6,640)
Right of use liability(184)(260)
Other deferred tax assets (liabilities)(4,616)(4,198)
Net deferred tax liabilities(202,999)(132,043)
Other comprehensive loss deferred tax liability1,481 949 
Net deferred tax liabilities$(116,838)$(110,418)
As of December 31, 2020, the Company had net operating loss carry forwards of approximately $348.0 million for federal tax purposes and $1.2 million (tax effected) for state tax purposes. The majority of the federal net operating loss carry forwards were generated this year and can be carried forward indefinitely, the remainder will expire at various times from 2032 to 2037, and the state net operating loss carry forwards will expire at various times from 2026 to 2042. There is a $0.4 million valuation allowance for net operating losses in California that expire between 2034 and 2042 and a $0.1 million valuation allowance for net operating losses in Georgia that expire between 2032 and 2040. The Company’s ability to utilize the net operating loss and tax credit carry forwards in
the future may be subject to restriction in the event of past or future ownership changes as defined in Section 382 of the Internal Revenue Code and similar state tax law. Management believes that no valuation allowance is required on deferred tax assets related to federal net operating loss carry forwards, as it is more likely than not that all amounts are recoverable through future taxable income. The open tax years for federal and state tax purposes are from 2003-2020, respectively.

It is the Company's intention to reinvest undistributed earnings of their wholly owned foreign operations and thereby indefinitely postpone their remittance. Accordingly, no provision has been made for foreign withholding taxes or U.S. Income taxes.