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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Note 17. Income Taxes We record current income tax expense for the amounts that we expect to report and pay on our income tax returns and deferred income tax expense for the change in the deferred tax assets and liabilities. On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the “Tax Act”) that significantly changed United States tax law. One part of this Tax Act required us to pay a deemed repatriation tax of $5.2 million on our cumulative foreign earnings and profit. After application of tax payments and credits, $1.0 million of the liability remains outstanding as of December 31, 2022 and 2021 and is due in 2024. Income from continuing operations before income taxes consisted of the following:
|  | Year Ended December 31, |
(in thousands) |  | 2022 |  |  | 2021 |  |  | 2020 |
Foreign |  | $ | 40,178 |  |  | $ | (17,750 | ) |  | $ | (95,919 | )
United States |  |  | (5,558 | ) |  |  | (77,331 | ) |  |  | (264,940 | )
Income (loss) from continuing operations before income taxes |  | $ | 34,620 |  |  | $ | (95,081 | ) |  | $ | (360,859 | )
Significant components of the income tax provision from continuing operations are as follows:
|  | Year Ended December 31, |
(in thousands) |  | 2022 |  |  | 2021 |  |  | 2020 |
Current: |  |  |  |  |  |  |  |  |
United States: |  |  |  |  |  |  |  |  |
Federal |  | $ | 78 |  |  | $ | 49 |  |  | $ | (128 | )
State |  |  | 302 |  |  |  | (581 | ) |  |  | 674 |
Foreign |  |  | 7,773 |  |  |  | (7,268 | ) |  |  | (1,397 | )
Total current |  |  | 8,153 |  |  |  | (7,800 | ) |  |  | (851 | )
Deferred: |  |  |  |  |  |  |  |  |
United States: |  |  |  |  |  |  |  |  |
Federal |  |  | 45 |  |  |  | — |  |  |  | 17,171 |
State |  |  | — |  |  |  | — |  |  |  | 2,896 |
Foreign |  |  | 1,775 |  |  |  | 6,012 |  |  |  | (4,970 | )
Total deferred |  |  | 1,820 |  |  |  | 6,012 |  |  |  | 15,097 |
Income tax (benefit) expense |  | $ | 9,973 |  |  | $ | (1,788 | ) |  | $ | 14,246 |
We are subject to income tax in the jurisdictions in which we operate. A reconciliation of the statutory federal income tax rate to the effective tax rate is as follows:
|  | Year Ended December 31, |
(in thousands) |  | 2022 |  |  | 2021 |  |  | 2020 |
Computed income tax expense (benefit) at statutory federal income tax rate |  | $ | 7,270 |  |  |  | 21.0 | % |  | $ | (19,967 | ) |  |  | 21.0 | % |  | $ | (75,780 | ) |  |  | 21.0 | %
State income tax expense (benefit), net of federal benefit |  |  | 1,264 |  |  |  | 3.6 | % |  |  | (7,959 | ) |  |  | 8.4 | % |  |  | (4,138 | ) |  |  | 1.1 | %
Remeasurement of deferred taxes due to change in tax rates |  |  | (499 | ) |  |  | (1.4 | )% |  |  | — |  |  |  | 0.0 | % |  |  | — |  |  |  | 0.0 | %
Foreign tax rate differential |  |  | 733 |  |  |  | 2.1 | % |  |  | (672 | ) |  |  | 0.7 | % |  |  | (401 | ) |  |  | 0.1 | %
U.S. tax expense on current year foreign earnings, net of foreign tax credits |  |  | 401 |  |  |  | 1.2 | % |  |  | — |  |  |  | 0.0 | % |  |  | — |  |  |  | 0.0 | %
Goodwill impairment |  |  | — |  |  |  | 0.0 | % |  |  | — |  |  |  | 0.0 | % |  |  | 16,471 |  |  |  | (4.6 | )%
Change in valuation allowance |  |  | (702 | ) |  |  | (2.0 | )% |  |  | 21,859 |  |  |  | (23.0 | )% |  |  | 77,369 |  |  |  | (21.3 | )%
Restructuring |  |  | — |  |  |  | 0.0 | % |  |  | 4,676 |  |  |  | (4.9 | )% |  |  | (3,002 | ) |  |  | 0.8 | %
Other adjustments, net |  |  | 1,506 |  |  |  | 4.3 | % |  |  | 275 |  |  |  | (0.3 | )% |  |  | 3,727 |  |  |  | (1.0 | )%
Income tax (benefit) expense |  | $ | 9,973 |  |  |  | 28.8 | % |  | $ | (1,788 | ) |  |  | 1.9 | % |  | $ | 14,246 |  |  |  | (3.9 | )%
The components of deferred income tax assets and liabilities included in the Consolidated Balance Sheets are as follows:
|  | December 31, |
(in thousands) |  | 2022 |  |  | 2021 |
Deferred tax assets: |  |  |  |  |  |
Tax credit carryforwards |  | $ | 7,461 |  |  | $ | 6,491 |
Pension, compensation, and other employee benefits |  |  | 16,287 |  |  |  | 14,755 |
Accrued liabilities and reserves |  |  | 4,000 |  |  |  | 3,979 |
Net operating loss carryforwards |  |  | 52,422 |  |  |  | 53,546 |
Leases |  |  | 2,897 |  |  |  | 2,557 |
Goodwill and other intangible assets |  |  | 5,100 |  |  |  | 17,781 |
Deferral of United States interest deductions |  |  | 13,048 |  |  |  | 6,770 |
Other deferred income tax assets |  |  | 9,601 |  |  |  | 11,194 |
Total deferred tax assets |  |  | 110,816 |  |  |  | 117,073 |
Valuation allowance |  |  | (101,639 | ) |  |  | (103,510 | )
Foreign deferred tax assets included above |  |  | (2,166 | ) |  |  | (5,037 | )
United States net deferred tax assets |  |  | 7,011 |  |  |  | 8,526 |
Deferred tax liabilities: |  |  |  |  |  |
Property and equipment |  |  | (21,090 | ) |  |  | (24,100 | )
Goodwill and other intangible assets |  |  | (10,857 | ) |  |  | (11,651 | )
Leases |  |  | (295 | ) |  |  | (339 | )
Other deferred income tax liabilities |  |  | (4,023 | ) |  |  | (4,254 | )
Total deferred tax liabilities |  |  | (36,265 | ) |  |  | (40,344 | )
Foreign deferred tax liabilities included above |  |  | (29,170 | ) |  |  | (31,778 | )
United States net deferred tax liabilities included above |  |  | (7,095 | ) |  |  | (8,566 | )
United States net deferred tax liabilities |  | $ | (84 | ) |  | $ | (40 | )
In 2022, due to the improved operations in GES Middle East and Europe, we are reporting a global intangible low-taxed income (“GILTI”) inclusion in the United States for the first time since 2020 resulting in a $0.4 million increase in tax. Due to improved worldwide earnings in 2022, our $0.7 million reduction of the valuation allowance was the result of realizing net operating losses and other deferred tax assets in excess of the amount of net operating losses and other deferred tax assets added. Our state income tax benefit in 2021 includes $4.0 million related to the true up of our state net operating losses on an entity-by-entity approach. In 2020 and at the beginning of 2021, we filed certain tax elections to restructure how our foreign UK operations are taxed in the United States to maximize future tax benefits and minimize future compliance complexity. These elections resulted in a $3.0 million benefit in 2020 and a $4.7 million expense in 2021. Both of these amounts were offset by a change in the valuation allowance. We use significant judgment in forming conclusions regarding the recoverability of our deferred tax assets and evaluate all available positive and negative evidence to determine if it is more-likely-than-not that the deferred tax assets will be realized. To the extent recovery does not appear likely, a valuation allowance must be recorded. In determining the recoverability of our deferred assets, we considered our cumulative loss incurred over the four-year period ended December 31, 2022 in each tax jurisdiction. Given the weight of objectively verifiable historical losses from our operations, we recorded a valuation allowance on all deferred tax assets in the United States, United Kingdom, Germany, Switzerland, and our FlyOver operations in Iceland and Toronto. We had gross deferred tax assets of $110.8 million as of December 31, 2022 and $117.1 million as of December 31, 2021. The valuation allowance was $101.6 million as of December 31, 2022 and $103.5 million at December 31, 2021. The decrease was primarily due to utilization of net operating losses and deferred tax assets to offset current year income including the book gain on the disposition of the ON Service assets, which were offset by an increase to deferred assets for additional foreign tax credits and net operating losses in certain foreign jurisdictions. As of December 31, 2022, we had foreign tax credit carryforwards of $6.8 million, including $3.8 million against United States income tax, of which $1.9 million will begin to expire in 2023 with the remaining $1.9 million beginning to expire in 2027. Foreign tax credits creditable against United Kingdom taxes was $3.0 million, which can be carried forward indefinitely. As of December 31, 2022, we had $0.7 million of United States research and development cre dit carryforwards will begin to expire in 2038. We recorded a valuation allowance on all tax credit carryforwards. We had gross federal, state, and foreign net operating loss carryforwards of $373.3 million as of December 31, 2022 and $366.8 million as of December 31, 2021. The net operating loss carryforwards for 2022 that relate to the United States federal, United Kingdom, Germany, and Poland may be carried forward indefinitely. Certain state net operating loss carryforwards of $164.6 million expire from 2023 through 2041, although many states now have unlimited carryforwards. We recorded a valuation allowance on all net operating losses, except losses generated in Canada (excluding FlyOver Canada Toronto), the Netherlands, and Sky Lagoon in Iceland. During 2022, we carried back $9.7 million of the $13.8 million 2021 Canadian net operating losses to receive a $3.5 million refund of prior year taxes and realized a $0.3 million tax benefit. The remaining $4.1 million of Canadian net operating losses may be carried forward to offset taxable income in the next 20 years, of which we recorded a valuation allowance of $1.6 million for FlyOver Canada Toronto. The gross net operating losses of Iceland of $15.9 million will expire between five and ten years. N et operating losses related to our prior operations in Switzerland and Hong Kong was $6.9 million. It is more likely than not these net operating losses will not be realized as we have closed our operations in these jurisdictions. Therefore, a full valuation allowance is recorded. However, realization of these net operating losses is possible until the legal liquidation is complete. We have not recorded deferred taxes for withholding taxes on current unremitted earnings of our subsidiaries in the United Kingdom, the Netherlands, and certain subsidiaries in Canada as there are no withholding taxes applied on the distributions of those current earnings in operations outside of the United States. We exercise judgment in determining the income tax provision for positions taken on prior returns when the ultimate tax determination is uncertain. We classify liabilities associated with uncertain tax positions as “Other deferred items and liabilities” in the Consolidated Balance Sheets unless expected to be paid or released within one year. We had liabilities associated with uncertain tax positions of $0.9 million as of December 31, 2022 and $0.5 million as of December 31, 2021. As of December 31, 2022, these amounts do not include any accrual of interest nor penalties as none would be owed on these amounts. We elected that all uncertain tax positions, including interest and penalties, are classified as a component of income tax expense. A reconciliation of the liabilities associated with uncertain tax positions (excluding interest and penalties) is as follows:
(in thousands) |  |  |
Balance at December 31, 2019 |  | $ | 225 |
Additions for tax positions taken in prior years |  |  | 25 |
Balance at December 31, 2020 |  |  | 250 |
Additions for tax positions taken in prior years |  |  | 285 |
Balance at December 31, 2021 |  |  | 535 |
Reductions for lapse of applicable statutes |  |  | (23 | )
Additions for tax positions taken in prior years |  |  | 378 |
Balance at December 31, 2022 |  | $ | 890 |
Our 2019 through 2021 United States federal tax years and various state tax years from 2018 through 2021 remain subject to income tax examinations by tax authorities. The tax years 2018 through 2021 remain subject to examination by various foreign taxing jurisdictions. We received net cash refunds from income taxes of $0.8 million during 2022, $7.1 million during 2021, and $14.9 million during 2020. Most of the $3.8 million gross cash refunds in 2022 were from the result of the carryback of net operating losses in Canada and in certain United States’ states. These cash refunds were generally offset by $2.4 million of cash payments made in other operations in Canada, $0.3 million of minimum state income taxes and $0.3 million net payments of other foreign income and withholding 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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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