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Note 12 - Federal and State Income Taxes | 12 Months Ended
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Dec. 31, 2019
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
12. | FEDERAL AND STATE INCOME TAXES
Under GAAP, deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and for income tax reporting purposes. Significant components of the Company’s deferred tax liabilities and assets at December 31 are as follows:
|  | 201 9 |  |  | 201 8 |
|  | (in thousands) |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Property and equipment |  | $ | 83,453 |  |  | $ | 78,502 |
Unrealized gains on securities |  |  | 2,580 |  |  |  | 2,580 |
Prepaid expenses and other |  |  | 2,193 |  |  |  | 2,667 |
Total deferred tax liabilities |  |  | 88,226 |  |  |  | 83,749 |
Deferred tax assets: |  |  |  |  |  |  |  |
Allowance for doubtful accounts |  |  | 760 |  |  |  | 572 |
QAFMV tax credit carryforward |  |  | 864 |  |  |  | 864 |
New hire tax credit |  |  | 124 |  |  |  | 124 |
Compensated absences |  |  | 512 |  |  |  | 460 |
Self-insurance allowances |  |  | 5,630 |  |  |  | 188 |
Marketable equity securities |  |  | 1,253 |  |  |  | 2,200 |
Net operating loss carryover |  |  | 15,364 |  |  |  | 17,241 |
Other |  |  | 198 |  |  |  | 203 |
Total deferred tax assets |  |  | 24,705 |  |  |  | 21,852 |
Net deferred tax liability |  | $ | 63,521 |  |  | $ | 61,897 |
The reconciliation between the effective income tax rate and the statutory Federal income tax rate for the years ended December 31, 2019, 2018 and 2017 is presented in the following table:
|  | 201 9 |  |  | 201 8 |  |  | 201 7 |
|  | (in thousands) |
|  | Amount |  |  | Percent |  |  | Amount |  |  | Percent |  |  | Amount |  |  | Percent |
Income tax at the statutory federal rate |  | $ | 2,124 |  |  |  | 21.0 |  |  | $ | 6,582 |  |  |  | 21.0 |  |  | $ | 4,975 |  |  |  | 34.0 |
Impact of the Tax Cuts and Jobs Act (1) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (29,255 | ) |  |  | (199.9 | )
Nondeductible expenses |  |  | 342 |  |  |  | 3.4 |  |  |  | 80 |  |  |  | 0.2 |  |  |  | 72 |  |  |  | 0.5 |
State income taxes/other—net of federal benefit |  |  | (251 | ) |  |  | (2.5 | ) |  |  | 685 |  |  |  | 2.2 |  |  |  | (60 | ) |  |  | (0.5 | )
Total income tax expense (benefit) |  | $ | 2,215 |  |  |  | 21.9 |  |  | $ | 7,347 |  |  |  | 23.4 |  |  | $ | (24,268 | ) |  |  | (165.9 | )
( 1 ) On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into law. The Act included numerous changes to existing tax law, including a permanent reduction in the federal corporate income tax rate from 35% to 21% effective January 1, 2018 and repeal of the alternative minimum tax (“AMT”) allowing a refund of existing AMT carryovers during the years 2018 through 2021. As a result, the Company recorded a tax benefit of $29.3 million in the fourth quarter of 2017 related to the revaluation of its net deferred tax liabilities. The provision (benefit) for income taxes consisted of the following:
|  | 201 9 |  |  | 201 8 |  |  | 201 7 |
|  | (in thousands) |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (56 | ) |  | $ | (48 | ) |  | $ | (79 | )
State |  |  | 646 |  |  |  | 189 |  |  |  | 441 |
Total current income tax provision |  |  | 590 |  |  |  | 141 |  |  |  | 362 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 2,177 |  |  |  | 6,185 |  |  |  | (24,622 | )
State |  |  | (552 | ) |  |  | 1,021 |  |  |  | (8 | )
Total deferred income tax provision (benefit) |  |  | 1,625 |  |  |  | 7,206 |  |  |  | (24,630 | )
Total income tax provision (benefit) expense |  | $ | 2,215 |  |  | $ | 7,347 |  |  | $ | (24,268 | )
At December 31, 2019, the Company has alternative minimum tax credits of approximately $607,000 which will either be refunded at the rate of 50% of the remaining credit each succeeding year, or used to offset regular Federal income tax in those succeeding years. The Company has general business credits of approximately $988,000 at December 31, 2018, which begin to expire after the year 2030. The Company also has net operating loss carryovers for federal income purposes of approximately $66,805,000 of which $30,835,000 will begin to expire after the year 2030 while the remaining balance does not expire and can be carried forward indefinitely. In determining whether a tax asset valuation allowance is necessary, management, in accordance with the provisions of ASC 740 - 10 - 30, weighs all available evidence, both positive and negative to determine whether, based on the weight of that evidence, a valuation allowance is necessary. If negative conditions exist which indicate a valuation allowance might be necessary, consideration is then given to what effect the future reversals of existing taxable temporary differences and the availability of tax strategies might have on future taxable income to determine the amount, if any, of the required valuation allowance. As of December 31, 2019 and 2018, management determined that the future reversals of existing taxable temporary differences and available tax strategies would generate sufficient future taxable income to realize its tax assets and therefore a valuation allowance was not necessary. The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the position will be sustained on examination by taxing authorities, based on the technical merits of the position. As of December 31, 2019, an adjustment to the Company’s consolidated financial statements for uncertain tax positions has not been required as management believes that the Company’s tax positions taken in income tax returns filed or to be filed are supported by clear and unambiguous income tax laws. The Company recognizes interest and penalties related to uncertain income tax positions, if any, in income tax expense. During 2019 and 2018, the Company has not recognized or accrued any interest or penalties related to uncertain income tax positions. The Company and its subsidiaries are subject to U.S. and Canadian federal income tax laws as well as the income tax laws of multiple state jurisdictions. The major tax jurisdictions in which the Company operates generally provide for a deficiency assessment statute of limitation period of three years, and as a result, the Company’s tax years 2016 and forward remain open to examination in those jurisdictions.

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