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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Taxes |
Income Taxes | 7. Income Taxes On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, the following that impact us: (1) reducing the U.S. federal corporate income tax rate from 35 percent to 21 percent; (2) eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized; (3) creating a new limitation on deductible interest expense; (4) repealing the domestic production activities deduction; (5) limiting the deductibility of certain executive compensation; and (6) limiting certain other deductions. The SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides for a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting relating to the Tax Act under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in its financial statements. If a company cannot determine a provisional estimate to be included in its financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act. As a result of our initial analysis of the impact of the Tax Act, we recorded a provisional amount of net tax benefit of $11.5 million in 2017 related to the remeasurement of our deferred tax balance and other effects. We completed our accounting for the income tax effects of the Tax Act in 2018, and no material adjustments were required to the provisional amounts initially recorded. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax liabilities and assets are as follows:
|  | December 31,
|  | 2019 |  | 2018
|  | (In thousands)
Deferred tax liabilities: |  |  |  |  |  |
Property and equipment |  | $ | 5,181 |  | $ | 5,145
Intangible assets |  |  | 20,765 |  |  | 19,324
Prepaid expenses |  |  | 376 |  |  | 350
Total deferred tax liabilities |  |  | 26,322 |  |  | 24,819
Deferred tax assets: |  |  |  |  |  |
Allowance for doubtful accounts |  |  | 64 |  |  | 118
Compensation |  |  | 1,011 |  |  | 906
Other accrued liabilities |  |  | 95 |  |  | 63
|  |  | 1,170 |  |  | 1,087
Less: valuation allowance |  |  | — |  |  | —
Total net deferred tax assets |  |  | 1,170 |  |  | 1,087
Net deferred tax liabilities |  | $ | 25,152 |  | $ | 23,732
Current portion of deferred tax assets |  | $ | 388 |  | $ | 303
Non-current portion of deferred tax liabilities |  |  | (25,540) |  |  | (24,035)
Net deferred tax liabilities |  | $ | (25,152) |  | $ | (23,732)
Deferred tax assets are required to be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. At December 31, 2019 and December 31, 2018, we do not have a valuation allowance for net deferred tax assets. At December 31, 2019 and 2018, net deferred tax liabilities include a deferred tax asset of $1,170,000 and $1,087,000, respectively, relating to deferred compensation, stock-based compensation expense, accrued compensation, the allowance for doubtful accounts, and other accrued expenses. The significant components of the provision for income taxes are as follows:
|  | Years Ended December 31,
|  | 2019 |  | 2018 |  | 2017
|  | (In thousands)
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 2,900 |  | $ | 2,205 |  | $ | 2,545
State |  |  | 1,100 |  |  | 835 |  |  | (255)
Total current |  |  | 4,000 |  |  | 3,040 |  |  | 2,290
Total deferred |  |  | 1,420 |  |  | 2,660 |  |  | (8,210)
Total Income Tax Provision |  | $ | 5,420 |  | $ | 5,700 |  | $ | (5,920)
In addition, we recognized a tax expense (benefit) of $0, $0, and ($100,000), as a result of stock option exercises for the difference between compensation expense for financial statement and income tax purposes for the years ended December 31, 2019, 2018 and 2017, respectively. The reconciliation of income tax at the U.S. federal statutory tax rates to income tax expense (benefit) is as follows:
|  | Years Ended December 31,
|  | 2019 |  | 2018 |  | 2017
|  | (In thousands)
Tax expense at U.S. statutory rates |  | $ | 3,976 |  | $ | 4,017 |  | $ | 5,716
State tax expense (benefit), net of federal benefit |  |  | 1,079 |  |  | 1,134 |  |  | (769)
Other, net |  |  | 365 |  |  | 549 |  |  | 633
Federal tax reform - deferred tax rate change |  |  | — |  |  | — |  |  | (11,500)
|  | $ | 5,420 |  | $ | 5,700 |  | $ | (5,920)
The 2019 and 2018 effective tax rates exceed the federal statutory rate primarily due to state income taxes. The 2017 effective tax rate differs from the federal statutory rate primarily due to the impacts of the Tax Act and state income tax benefit on 2017’s earnings. The Company files income taxes in the U.S. federal jurisdiction, and in various state and local jurisdictions. The Company is no longer subject to U.S. federal examinations by the Internal Revenue Service (IRS) for years prior to 2016. During the first quarter of 2015, the IRS commenced an examination of the Company’s 2013 U.S. federal income tax return which was completed in the first quarter of 2016 and resulted in no changes to the return. The Company is subject to examination for income and non-income tax filings in various states. As of December 31, 2019, and 2018 there were no accrued balances recorded related to uncertain tax positions. We classify income tax-related interest and penalties that are related to income tax liabilities as a component of income tax expense. For the years ended December 31, 2019, 2018 and 2017, we had $2,100, $31,000, and $0, respectively, tax-related interest and penalties and had $0 accrued at December 31, 2019 and 2018.

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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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