Income Taxes

6 Months Ended

Jun. 30, 2021

Note 17 – Income Taxes

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law. The CARES Act includes several significant business tax provisions that, among other things, temporarily repealed the taxable income limitation for certain net operating losses (NOL) and allows businesses to carry back NOLs arising in 2018, 2019, and 2020 tax years to the five prior tax years, accelerated refunds of previously generated corporate Alternative Minimum Tax (AMT) credits, and adjusted the business interest expense limitation under section 163(j) from 30% to 50% of Adjusted Taxable Income (ATI) for 2019 and 2020 tax years.

Based on information available at the time, we estimated that modifications to the tax rules for the carryback of NOLs and business interest expense limitations would result in U.S. and USVI federal net tax refunds of approximately $63.1 million and $1.9 million, respectively, and as such we recognized an income tax benefit of $65.0 million in our unaudited consolidated financial statements for the six months ended June 30, 2020.

The income tax benefit recognized represents the release of valuation allowances against certain NOL and Section 163(j) deferred tax assets that were realized as a result of certain provisions of the CARES Act as well as permanent income tax benefit related to the carryback of NOLs created in a tax year that was subject to U.S. federal tax at 21% to a tax year subject to tax at 35%.

We recognized income tax benefit, exclusive of the impact of the CARES Act recognized in 2020, of $11.9 million and $7.9 million for the three months ended June 30, 2021 and 2020, respectively, and $8.8 million and $5.0 million for the six months ended June 30, 2021 and 2020, respectively, primarily due to the favorable resolution of various uncertain tax positions in both the second quarters of 2021 and 2020. Additional income tax benefit was recognized related to pre-tax losses incurred during these periods.

- 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.

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