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Note 9 - Income Taxes | 12 Months Ended
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Dec. 31, 2017
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | 9. INCOME TAXES Income tax expense (benefit) for the years ended December 31, 201 7, 2016, and 2015 is comprised of:
(in thousands) |  | 2017 |  |  | 2016 |  |  | 2015 |
Federal, current |  | $ | (7,780 | ) |  | $ | 11,951 |  |  | $ | 124 |
Federal, deferred |  |  | (28,055 | ) |  |  | (2,925 | ) |  |  | 18,185 |
State, current |  |  | (1,737 | ) |  |  | 1,811 |  |  |  | 426 |
State, deferred |  |  | 5,430 |  |  |  | (451 | ) |  |  | 3,087 |
Actual income tax expense |  | $ | (32,142 | ) |  | $ | 10,386 |  |  | $ | 21,822 |
Income tax expense for t he years ended December 31, 2017, 2016, and 2015 is summarized below:
(in thousands) |  | 2017 |  |  | 2016 |  |  | 2015 |
Computed "expected" income tax expense |  | $ | 8,154 |  |  | $ | 9,527 |  |  | $ | 22,368 |
State income taxes, net of federal income tax effect |  |  | 862 |  |  |  | 953 |  |  |  | 2,237 |
Per diem allowances |  |  | 2,145 |  |  |  | 2,205 |  |  |  | 2,329 |
Tax contingency accruals |  |  | (43 | ) |  |  | (273 | ) |  |  | 1,599 |
Valuation allowance, net |  |  | (1,167 | ) |  |  | - |  |  |  | 218 |
Tax credits |  |  | (1,084 | ) |  |  | (694 | ) |  |  | (7,151 | )
Impact of Tax Cuts and Jobs Act remeasurement |  |  | (40,123 | ) |  |  | - |  |  |  | - |
Excess tax benefits on share-based compensation |  |  | (457 | ) |  |  | - |  |  |  | - |
Other, net |  |  | (429 | ) |  |  | (1,332 | ) |  |  | 222 |
Actual income tax expense |  | $ | (32,142 | ) |  | $ | 10,386 |  |  | $ | 21,822 |
Income tax expense varies from the amount computed by applying the applicable federal corporate income tax rate for 2015 through 2017 of 35% to income before income taxes primarily due to state income taxes, net of federal income tax effect, adjusted for permanent differences, the most significant of which is the effect of the per diem pay structure for drivers and the impacts of tax reform discussed below . Drivers who meet the requirements to receive per diem receive non-taxable per diem pay in lieu of a portion of their taxable wages. This per diem program increases our drivers' net pay per mile, after taxes, while decreasing gross pay, before taxes. As a result, salaries, wages, and employee benefits are slightly lower and our effective income tax rate is higher than the statutory rate. Generally, as pre-tax income increases, the impact of the driver per diem program on our effective tax rate decreases, because aggregate per diem pay becomes smaller in relation to pre-tax income, while in periods where earnings are at or near breakeven, the impact of the per diem program on our effective tax rate is significant. Due to the partially nondeductible effect of per diem pay, our tax rate will fluctuate in future periods based on fluctuations in earnings. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“TCJA”) was signed into law. The TCJA brought about many changes in tax law, the most significant of which was a reduction of the corporate tax rate from 35% to 21% beginning in 2018. Other provisions impacting the Company include 100% expensing of qualifying fixed assets, repeal of the like-kind exchange program for property other than real property, and removal of the performance-based exception on executive compensation over $1 million. The Company has analyzed the TCJA and recorded net benefit of $40.1 million for the effects of these items in its 2017 income tax provision in the fourth quarter, the period of enactment. See further discussion below. The temporary differences and the approximate tax effects that give rise to our net deferred tax li ability at December 31, 2017 and 2016 are as follows:
(in thousands) |  | 2017 |  |  | 2016 |
Deferred tax assets: |  |  |  |  |  |  |  |
Insurance and claims |  | $ | 8,797 |  |  | $ | 15,147 |
Net operating loss carryovers |  |  | 4,755 |  |  |  | 3,326 |
Tax credits |  |  | 11,875 |  |  |  | 6,409 |
Other |  |  | 4,414 |  |  |  | 5,113 |
Deferred fuel hedge |  |  | - |  |  |  | 1,653 |
Valuation allowance |  |  | (63 | ) |  |  | (1,219 | )
Total deferred tax assets |  |  | 29,778 |  |  |  | 30,429 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Property and equipment |  |  | (76,325 | ) |  |  | (98,679 | )
Investment in partnership |  |  | (14,197 | ) |  |  | (9,730 | )
Deferred fuel hedge |  |  | (99 | ) |  |  | - |
Other |  |  | - |  |  |  | (1,391 | )
Prepaid expenses |  |  | (2,501 | ) |  |  | (4,786 | )
Total net deferred tax liabilities |  |  | (93,122 | ) |  |  | (114,586 | )
Net deferred tax liability |  | $ | (63,344 | ) |  | $ | (84,157 | )
The net deferred tax liability of $ 63.3 million primarily relates to differences in cumulative book versus tax depreciation of property and equipment, partially off-set by tax credit carryovers and insurance claims that have been reserved but not paid. The carrying value of our deferred tax assets assumes that we will be able to generate, based on certain estimates and assumptions, sufficient future taxable income in certain tax jurisdictions to utilize these deferred tax benefits. If these estimates and related assumptions change in the future, we may be required to establish a valuation allowance against the carrying value of the deferred tax assets, which would result in additional income tax expense. On a periodic basis, we assess the need for adjustment of the valuation allowance. Based on forecasted taxable income resulting from the reversal of deferred tax liabilities, primarily generated by accelerated depreciation for tax purposes in prior periods, and tax planning strategies available to us, no valuation allowance has been established at December 31, 2017 or 2016, except for $0.1 million and $1.2 million at December 31, 2017 and 2016, respectively, related to certain state net operating loss carry forwards. If these estimates and related assumptions change in the future, we may be required to modify our valuation allowance against the carrying value of the deferred tax assets. As of December 31, 2017, we had a $ 2.8 million liability recorded for unrecognized tax benefits, which includes interest and penalties of $0.8 million. We recognize interest and penalties accrued related to unrecognized tax benefits in tax expense. As of December 31, 2016, we had a $2.8 million liability recorded for unrecognized tax benefits, which included interest and penalties of $0.8 million. Interest and penalties recognized for uncertain tax positions provided for a $0.1 million benefit, $0.1 million expense, and a $0.2 million benefit in each of 2017, 2016, and 2015 respectively. The following tables summarize the annual activity related to our gross unrecognized tax benefits (in thousands) for the years ended December 31, 2017, 2016, and 2015:
|  | 2017 |  |  | 2016 |  |  | 2015 |
Balance as of January 1, |  | $ | 2,051 |  |  | $ | 2,394 |  |  | $ | 995 |
Increases related to prior year tax positions |  |  | 19 |  |  |  | - |  |  |  | 1,737 |
Decreases related to prior year positions |  |  | (10 | ) |  |  | - |  |  |  | - |
Increases related to current year tax positions |  |  | - |  |  |  | - |  |  |  | - |
Decreases related to settlements with taxing authorities |  |  | - |  |  |  | (88 | ) |  |  | (182 | )
Decreases related to lapsing of statute of limitations |  |  | (136 | ) |  |  | (255 | ) |  |  | (156 | )
Balance as of December 31, |  | $ | 1,924 |  |  | $ | 2,051 |  |  | $ | 2,394 |
If recognized, $ 2.5 million and $2.4 million of unrecognized tax benefits would impact our effective tax rate as of December 31, 2017 and 2016, respectively. Any prospective adjustments to our reserves for income taxes will be recorded as an increase or decrease to our provision for income taxes and would impact our effective tax rate. Our 2014 through 2017 tax years remain subject to examination by the IRS for U.S. federal tax purposes, our major taxing jurisdiction. We have one tax position taken on our 2013 federal return that is under audit by the Internal Revenue Service. This position relates to a non-recurring tax credit of approximately $6.5 million . In the normal course of business, we are also subject to audits by state and local tax authorities. While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, we believe that our reserves reflect the more likely than not outcome of known tax contingencies. We adjust these reserves, as well as the related interest, in light of changing facts and circumstances. Settlement of any particular issue would usually require the use of cash. Favorable resolution would be recognized as a reduction to our annual tax rate in the year of resolution. We do not expect any significant increases or decreases for uncertain income tax positions during the next year. Our federal tax credits of $ 10.5 million, along with a federal alternative minimum tax credit carryforward of $1.0 million are available to offset future federal taxable income, if any, through 2037, while our state net operating loss carryforwards and state tax credits of $91.1 million and $0.5 million, respectively expire over various periods through 2037 based on jurisdiction. At December 31, 2017, we have not completed our accounting for the tax effects of the enactment of the TCJA; however, in certain cases, as described below, we have made a reasonable estimate of the effects on our existing deferred tax balances. There were no aspects of the TCJA that impacted 2017 for which we were unable to make a reasonable estimate. We recognized a provisional benefit amount of $40.1 million, which is included as a component of income tax expense from continuing operations. In all cases, we will continue to make and refine our calculations as additional analysis is completed. In addition, our estimates may also be affected as we gain a more thorough understanding of the tax law on a federal and state basis. Provisional Amounts Deferred tax assets and liabilities: We remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. However, we are still analyzing certain aspects of the TCJA and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. The provisional amount is also subject to change based on how states conform to the TCJA, as that information is not readily available for many states at this time. In addition to adjusting the rate applied to deferred tax balances, we also analyzed the future deductibility of restricted stock awards for executives and computed the effects of an NOL carryback to benefit the loss at 35% in prior years. The provisional amount recorded related to the remeasurement of our deferred tax bala nce was a net benefit of $40.1 million.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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