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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of income before income taxes are as follows:
| Years ended December 31,
| 2021 |  | 2020
| (in thousands)
United States | $ | 4,659 |  |  | $ | 16,990 |
Foreign | 4,481 |  |  | 346 |
Income before income taxes | $ | 9,140 |  |  | $ | 17,336 |
The components of income tax expense for the years ended December 31, 2021 and 2020 were as follows:
| Federal |  | State |  | Foreign |  | Total
| (in thousands)
2021 |  |  |  |  |  |  |
Current | $ | — |  |  | $ | (2) |  |  | $ | 1,597 |  |  | $ | 1,595 |
Deferred | 4,072 |  |  | 121 |  |  | — |  |  | 4,193 |
Total | $ | 4,072 |  |  | $ | 119 |  |  | $ | 1,597 |  |  | $ | 5,788 |
2020 |  |  |  |  |  |  |
Current | $ | — |  |  | $ | (88) |  |  | $ | 723 |  |  | $ | 635 |
Deferred | 6,251 |  |  | 702 |  |  | — |  |  | 6,953 |
Total | $ | 6,251 |  |  | $ | 614 |  |  | $ | 723 |  |  | $ | 7,588 |
The following is a reconciliation of the federal income tax expense at the statutory rate of 21% for the years ended December 31, 2021 and 2020 to the effective income tax expense:
| Years Ended December 31,
| 2021 |  | 2020
| (in thousands)
Statutory federal income tax expense | $ | 1,844 |  |  | $ | 3,640 |
State taxes, net of federal benefit | 119 |  |  | 633 |
Foreign tax paid | — |  |  | — |
Foreign jurisdiction rate differential | 705 |  |  | 508 |
Permanent differences-nondeductible executive compensation | 2,042 |  |  | 2,748 |
Permanent differences and other | 1,078 |  |  | 59 |
Effective income tax expense | $ | 5,788 |  |  | $ | 7,588 |
Permanent differences and other includes Subpart F income of $1.4 million from foreign operations for the year-ended December 31, 2021. 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, 2019 | $ | 270 |
Increases related to current year tax positions | 66 |
Decreases due to tax positions expired | (6) |
Balance as of December 31, 2020 | 330 |
Decreases related to current year tax positions | — |
Decreases due to tax positions expired | (317) |
Balance as of December 31, 2021 | $ | 13 |
A $0.0 and $0.3 million reserve was established as of December 31, 2021 and 2020, respectively, for the exposure in Europe. Due to law changes in the United Kingdom, the Company believes that it is at a more likely than not position and has released the 2020 $0.3 million reserve. 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,
| 2021 |  | 2020
| (in thousands)
Deferred tax assets: |  |  |
Unearned lease revenue | $ | 2,217 |  |  | $ | 2,519 |
State taxes | — |  |  | 10 |
Inventory | 1,486 |  |  | 2,153 |
Reserves and allowances | 6,781 |  |  | 4,356 |
Other accruals | 2,577 |  |  | 1,769 |
Foreign tax credit | — |  |  | — |
Lease liability | 146 |  |  | 198 |
Net operating loss carry forward | 68,168 |  |  | 74,045 |
California alternative minimum tax credit | 33 |  |  | 33 |
Charitable contributions | 2 |  |  | 65 |
Total deferred tax assets | 81,410 |  |  | 85,148 |
Less: valuation allowance | (518) |  |  | (468) |
Net deferred tax assets | 80,892 |  |  | 84,680 |
Deferred tax liabilities: |  |  |
Depreciation and impairment on aircraft engines and equipment | (183,131) |  |  | (163,773) |
Inventory | — |  |  | — |
Notes receivable | (15,911) |  |  | (34,426) |
Right of use liability | (139) |  |  | (184) |
Other deferred tax liabilities | (4,595) |  |  | (4,616) |
Net deferred tax liabilities | (203,776) |  |  | (202,999) |
Other comprehensive (income) loss deferred tax liability | (1,448) |  |  | 1,481 |
Net deferred tax liabilities | $ | (124,332) |  |  | $ | (116,838) |
As of December 31, 2021, the Company had net operating loss carry forwards of approximately $316.3 million for federal tax purposes and $2.2 million (tax effected) for state tax purposes. The majority of the federal net operating loss carry forwards were generated in 2020 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 $0.5 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 2004 to 2021, 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.

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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=121826272&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=122134291&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=121826272&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=122134291&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=121826272&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 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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