Income Taxes

12 Months Ended

Dec. 31, 2020

(8) INCOME TAXES

The Company is subject to federal and applicable state corporate income taxes on its taxable ordinary income and capital gains. As a corporation taxed under Subchapter C of the Internal Revenue Code, the Company is able, and intends, to file a consolidated federal income tax return with corporate subsidiaries in which it holds 80% or more of the outstanding equity interest measured by both vote and fair value.

The following table sets forth the significant components of our deferred and other tax assets and liabilities as of December 31, 2020 and 2019.

(Dollars in thousands)	2020			2019
Goodwill and other intangibles	$	(44,799	)	$	(45,595	)
Provision for loan losses		19,556			19,198
Net operating loss carryforwards ⁽¹⁾		30,493			22,607
Accrued expenses, compensation, and other assets		1,174			1,701
Unrealized gains on other investments		(6,769	)		(6,790	)
Total deferred tax liability		(345	)		(8,879	)
Valuation allowance		(462	)		(462	)
Deferred tax liability, net		(807	)		(9,341	)
Taxes receivable		1,757			1,516
Net deferred and other tax liabilities	$	950		$	(7,825	)

(1)	As of December 31, 2020, the Company and its subsidiaries had an estimated $124,150 of net operating loss carryforwards, $1,712 which expires at various dates between December 31, 2026 and December 31, 2035, and which had a net asset value of $30,031 as of December 31, 2020.

The components of our tax (provision) benefit for the years ended December 31, 2020, 2019, and 2018 were as follows.

(Dollars in thousands)	2020			2019			2018
Current
Federal	$	—		$	—		$	(2,797	)
State		(260	)		519			(1,078	)
Deferred
Federal		7,702			(489	)		5,270
State		2,632			(371	)		(1,464	)
Net (provision) benefit for income taxes	$	10,074		$	(341	)	$	(69	)

The following table presents a reconciliation of statutory federal income tax (provision) benefit to consolidated actual income tax (provision) benefit reported for the years ended December 31, 2020, 2019, and 2018.

(Dollars in thousands)	2020			2019			2018
Statutory Federal income tax (provision) benefit at 21%	$	7,766		$	(642	)	$	4,935
State and local income taxes, net of federal income tax benefit		1,518			(120	)		440
Revaluation of net operating losses		1,228			380			—
Change in effective state income tax rate		(145	)		(891	)		(2,564	)
Change in state income tax accruals		(260	)		640			—
Income attributable to non-controlling interest		460			309			—
Non deductible expenses		(453	)		—			—
Utilization of carry forwards		—			—			(910	)
Appreciation of Medallion Bank		—			—			(1,974	)
Other		(40	)		(17	)		4
Total income tax (provision) benefit	$	10,074		$	(341	)	$	(69	)

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible pursuant to ASC 740. The Company considers the reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The Company’s evaluation of the realizability of deferred tax assets must consider both positive and negative evidence. The weight given to the potential effects of positive and negative evidence is based on the extent to which it can be objectively verified. Based upon these considerations, the Company determined the necessary valuation allowance as of December 31, 2020.

The Company has filed tax returns in many states. Federal, New York State, New York City, and Utah state tax filings of the Company for the tax years 2017 through the present are the more significant filings that are open for examination.

- 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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