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Income Taxes
 12 Months Ended
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,
 20212020
 (in thousands)
United States$4,659 $16,990 
Foreign4,481 346 
Income before income taxes$9,140 $17,336 
The components of income tax expense for the years ended December 31, 2021 and 2020 were as follows:
 FederalStateForeignTotal
 (in thousands)
2021    
Current$— $(2)$1,597 $1,595 
Deferred4,072 121 — 4,193 
Total$4,072 $119 $1,597 $5,788 
2020
Current$— $(88)$723 $635 
Deferred6,251 702 — 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,
 20212020
 (in thousands)
Statutory federal income tax expense$1,844 $3,640 
State taxes, net of federal benefit119 633 
Foreign tax paid— — 
Foreign jurisdiction rate differential705 508 
Permanent differences-nondeductible executive compensation2,042 2,748 
Permanent differences and other1,078 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 positions66 
Decreases due to tax positions expired(6)
Balance as of December 31, 2020330 
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,
 20212020
 (in thousands)
Deferred tax assets:  
Unearned lease revenue$2,217 $2,519 
State taxes— 10 
Inventory1,486 2,153 
Reserves and allowances6,781 4,356 
Other accruals2,577 1,769 
Foreign tax credit— — 
Lease liability146 198 
Net operating loss carry forward68,168 74,045 
California alternative minimum tax credit33 33 
Charitable contributions2 65 
Total deferred tax assets81,410 85,148 
Less: valuation allowance(518)(468)
Net deferred tax assets80,892 84,680 
Deferred tax liabilities:
Depreciation and impairment on aircraft engines and equipment(183,131)(163,773)
Inventory— — 
Notes receivable(15,911)(34,426)
Right of use liability(139)(184)
Other deferred tax liabilities(4,595)(4,616)
Net deferred tax liabilities(203,776)(202,999)
Other comprehensive (income) loss deferred tax liability(1,448)1,481 
Net deferred tax liabilities$(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.