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Note 12 - Federal and State Income Taxes
 12 Months Ended
Dec. 31, 2023
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:

 

  

2023

  

2022

 
  

(in thousands)

 
         

Deferred tax liabilities:

        

Property and equipment

 $101,623  $102,169 

Unrealized gains on securities

  3,282   2,894 

Prepaid expenses and other

  3,303   3,836 
         

Total deferred tax liabilities

  108,208   108,899 
         

Deferred tax assets:

        

Current expected credit losses

  1,986   1,385 

Compensated absences

  168   215 

Self-insurance allowances

  1,674   5,746 

Other

  49   108 
         

Total deferred tax assets

  3,877   7,454 
         

Net deferred tax liability

 $104,331  $101,445 

 

The reconciliation between the effective income tax rate and the statutory Federal income tax rate for the years ended December 31, 2023, 2022 and 2021 is presented in the following table:

 

  

2023

  

2022

  

2021

 
  

(in thousands)

 
  

Amount

  

Percent

  

Amount

  

Percent

  

Amount

  

Percent

 
                         

Federal income tax at statutory rate

 $6,002   21.0  $24,991   21.0  $21,526   21.0 

Nondeductible per diem and meals

  371   1.3   -   -   -   - 

State income taxes/other, net

  3,790   13.3   3,344   2.8   4,463   4.4 
                         

Total income tax expense

 $10,163   35.6  $28,335   23.8  $25,989   25.4 

 

The provision (benefit) for income taxes consisted of the following:

 

  

2023

  

2022

  

2021

 
  

(in thousands)

 

Current:

            

Federal

 $4,697  $10,673  $6,314 

State

  2,580   3,121   1,843 

Total current income tax provision

  7,277   13,794   8,157 

Deferred:

            

Federal

  944   12,920   13,720 

State

  1,942   1,621   4,112 

Total deferred income tax provision

  2,886   14,541   17,832 
             

Total income tax provision expense

 $10,163  $28,335  $25,989 

 

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, 2023 and 2022, 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, 2023, 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 2023 and 2022, 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 2020 and forward remain open to examination in those jurisdictions.