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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
During the years ended December 31, 2023, 2022 and 2021, the Company recognized income tax expense of $6.8 million, $26.9 million and $45.1 million, respectively, resulting in effective tax rates of 23.5%, 28.8% and 23.6%, respectively. The Company’s income tax expense for the year ended December 31, 2023 differs from amounts computed by applying the U.S. federal statutory tax rate of 21% are primarily the result of permanent book/tax differences related to non-deductible compensation under Section 162(m).
The Company’s income tax expense for the year ended December 31, 2022 differs from amounts computed by applying the U.S. federal statutory tax rate of 21% primarily due to the impact of state income taxes. The Company’s income tax expense for the year ended December 31, 2021 differs from amounts computed by applying the U.S. federal statutory tax rate of 21% primarily due to the impact of state income taxes and the gain associated with the extinguishment of the liability associated with the tax receivable agreement.
The components of the Company’s income tax expense attributable to operations are as follows:
Year Ended December 31,
202320222021
(in thousands)
Current tax expense
Federal$10,091 $22,029 $19,537 
State1,682 4,516 5,494 
Deferred tax expense (benefit)
Federal(2,821)(4,165)16,098 
State(2,164)4,540 3,957 
Income tax expense$6,788 $26,920 $45,086 
The Company’s income tax expense attributable to operations differs from the expected tax benefit amount computed by applying the statutory federal income tax rate to income before taxes is as follows:
Year Ended December 31,
202320222021
Income tax expense (benefit) computed at the statutory rate21.0 %21.0 %21.0 %
State income taxes— %7.7 %3.7 %
Officer's compensation limitation under 162(m) (1)
2.5 %0.7 %0.3 %
Stock-based compensation (1)
1.1 %0.5 %0.1 %
Gain on extinguishment of tax receivable agreement— %— %(1.0)%
Other, net (1)
(1.1)%(1.1)%(0.5)%
Income tax expense (benefit) effective tax rate23.5 %28.8 %23.6 %
(1) Certain prior year tax component amounts have been reclassified to conform to the current year presentation.
The Company’s state income taxes include a decrease in expense associated with the remeasurement of the Company’s deferred tax assets for increases to estimated tax rates expected to be applied in future years.
The components of the Company’s deferred tax assets and liabilities are as follows:
Year Ended December 31,
20232022
(in thousands)
Deferred tax assets
Amortizable intangible assets$73,650 $78,296 
Operating lease liability995 1,113 
Accrued expenses1,418 563 
Total deferred tax assets (1)
$76,063 $79,972 
Deferred tax liabilities
Contract assets(4,056)(12,863)
Operating lease right-of-use asset(972)(1,105)
Fixed assets(463)(608)
Other(459)(268)
Total deferred tax liabilities$(5,950)$(14,844)
Deferred tax asset, net$70,113 $65,128 
(1) Certain prior year deferred tax component amounts have been reclassified to conform to the current year presentation.
As of December 31, 2023, the Company has assessed whether it is more likely than not that the Company’s deferred tax assets will be realized. In making this determination, the Company considers all available positive and negative evidence and makes certain assumptions. The Company considers, among other things, the reversal of its deferred tax liabilities, the overall business environment, its historical earnings and losses, current industry trends and its outlook for future years. The Company believes it is more-likely-than-not all deferred tax assets will be realized and has not recorded any valuation allowance as of December 31, 2023.
The total amount of unrecognized tax benefits as of December 31, 2023 that, if recognized, would impact the effective income tax rate was $4.0 million. The total amount of unrecognized tax benefits as of December 31, 2022 that, if recognized, would impact the effective income tax rate was $3.9 million.
As of December 31, 2023, the Company has a receivable of $5.1 million related to state income tax refund claims filed for prior tax years. The liability for unrecognized tax benefits includes $3.8 million of tax expense associated with these refund claims and tax uncertainties in various state jurisdictions due to the complexity of applying evolving state tax laws and uncertainties with respect to sustaining the Company’s refunds claims. The Company believes it is not reasonably possible that the unrecognized tax benefits will significantly change during the next twelve months.
In 2023, the Company changed its policy to recognize interest and penalties related to income taxes as a component of income tax expense to better align the classification with the substance of the associated transactions. This accounting policy change had no impact to net income or basic and diluted earnings per share, or to the Consolidated Statements of Operations, for any previous period.
The Company files its federal and state income tax returns and some of these returns remain open for examination, with the earliest open years in its key jurisdictions as follows:
U.S. Federal2016
State of Texas2016
State of New York2017
State of Illinois2020