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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Taxes [Abstract]  
Income Taxes 13.  INCOME TAXES

The Company’s US and foreign pre-tax (loss) income is summarized in the table below:

Amounts in thousands

2023

2022

2021

(Loss) income before taxes:

US

$

(30,793)

$

(10,142)

$

29,715

Foreign

6,961

16,152

(1,566)

Total (loss) income before taxes

$

(23,832)

$

6,010

$

28,149

The Company’s (benefit) provision for income taxes is summarized as follows:

For the year ended December 31,

Amounts in thousands

2023

2022

2021

US - Current

$

1,088

$

3,176

$

5,160

US - Deferred

(6,504)

(14,981)

—

(Benefit) provision for US income taxes

$

(5,416)

$

(11,805)

$

5,160

Foreign - Current

$

17,085

$

4,291

$

866

Foreign - Deferred

(17,012)

(146)

345

Provision for foreign income taxes

$

73

$

4,145

$

1,211

Total (benefit) provision for income taxes

$

(5,343)

$

(7,660)

$

6,371

The Company’s effective income tax rate differs from the statutory federal income tax rate as follows:

Amounts in thousands

2023

2022

2021

US federal income tax statutory rate

21.0%

21.0%

21.0%

Foreign tax rate differential

23.3%

18.6%

(0.5%)

State income tax (net of federal benefit)

2.1%

0.9%

3.0%

Income taxed to owners of non-controlling interest (Smooth Bourbon)

4.7%

—

—

Meals, entertainment, gifts and giveaways

(1.0%)

3.7%

0.4%

Statutory to US GAAP adjustments, including foreign currency

0.8%

(3.7%)

2.6%

Valuation allowance

(5.5%)

(173.5%)

(4.6%)

Unrecognized tax benefit

(0.3%)

(4.7%)

(0.3%)

Stock options

(1.0%)

7.0%

1.3%

Global Intangible Low-Taxed Income ("GILTI"), net foreign tax credits

—

2.5%

—

Foreign dividend withholding - current

(5.1%)

—

—

Foreign dividend withholding - unremitted earnings

(15.0%)

—

—

Permanent and other items

(1.6%)

0.7%

(0.3%)

Total provision for income taxes

22.4%

(127.5%)

22.6%

The Company’s effective income tax rate for the year ended December 31, 2023 was 22.4%. The federal corporate income tax rate in the United States for 2023 was 21%. The Company is also subject to Colorado, Missouri, West Virginia and Maryland state jurisdictions that had corporate tax rates ranging from 4.0% to 8.25% in 2023. The Company’s foreign tax rate differential reflects the fact that the US federal corporate income tax rate differs from statutory rates in Poland, Austria, Mauritius and Canada, which are 19.0%, 25.0%, 15.0% and 23.0%, respectively. Additionally, the Company had a preferential tax rate of 11.5% on a portion of the taxable gain recognized from the Canada Real Estate Sale with VICI PropCo. Further, the income tax burden on the earnings taxed to the non-controlling interest holders of Smooth Bourbon is not reported by the Company.

Items unfavorably impacting the effective tax rate include a foreign withholding tax related to a cash dividend paid from the Company’s Canadian subsidiary CDR to its wholly owned Austrian subsidiary CRM. Additionally, the Company does not intend to permanently reinvest its current earnings in Canada, which predominately include earnings from the Canada Real Estate Sale. In anticipation of the Company’s plan to potentially repatriate a portion of these unremitted earnings to the US in the form of a cash dividend, the Company has recorded a deferred tax liability of $3.6 million for the required foreign tax withholding associated with the potential dividend. Movement in the valuation allowance on Century Mile’s deferred tax assets also impacted the Company’s effective income tax rate. The movement of exchange rates for intercompany loans denominated in US dollars further impacted the effective income tax rate because foreign currency gains and losses generally are not taxed until realized. Therefore, the overall effective income tax rate can be impacted by foreign currency gains or losses in the future.

The Company records deferred tax assets and liabilities based on the difference between the financial statement and income tax basis of assets and liabilities using the enacted statutory tax rate in effect for the year these differences are expected to be taxable or reversed. Deferred income tax expenses or credits are based on the changes in the asset or liability from period to period. The recorded deferred tax assets are reviewed for impairment on a quarterly basis by reviewing the Company’s internal estimates for future taxable income. The Company assesses the need for a valuation allowance based on its ability to realize the benefits of the Company’s deferred tax assets.

The Company continues to maintain a full valuation allowance on deferred tax assets for CMR, CRM and Century Resorts International, Ltd. As of December 31, 2023, the Company had $21.5 million in net deferred tax assets in the US. These deferred tax assets include approximately $11.0 million for disallowed interest expense and $2.7 million related to net operating loss (“NOL”) carryforwards that can be used to offset taxable income in future periods. At this time, management considers it more likely than not that the Company will have sufficient taxable income in the future to utilize these deferred tax assets. However, unless the Company is able to generate sufficient taxable income in the US, a valuation allowance to reduce these deferred tax assets may be required, which would materially increase the tax expense in the period the allowance is recognized.


‎

The Company’s deferred income taxes at December 31, 2023 and 2022 are summarized as follows:

Amounts in thousands

2023

2022

Deferred tax assets (liabilities) - US Federal and state:

Deferred tax assets

Amortization of goodwill for tax

$

8,115

$

8,101

Financing obligation to VICI Properties, Inc. subsidiaries

127,074

69,356

NOL carryforward

2,705

—

Operating and finance leases

394

462

Disallowed interest expense

11,036

3,588

Accrued liabilities and other

1,780

1,040

151,104

82,547

Valuation allowance

—

—

$

151,104

$

82,547

Deferred tax liabilities

Property and equipment

$

(126,426)

$

(66,062)

Operating and finance leases

(375)

(444)

Prepaid expenses

(475)

(342)

Unremitted foreign subsidiary earnings

(2,343)

—

Other

—

(718)

$

(129,619)

$

(67,566)

Long-term deferred tax asset

$

21,485

$

14,981

Deferred tax assets (liabilities) - foreign

Deferred tax assets

Property and equipment

$

314

$

276

Financing obligation to VICI Properties, Inc. subsidiaries

38,354

—

NOL carryforward

10,245

7,464

Accrued liabilities and other

978

984

Operating and finance leases

5,138

8,415

Subsidiary liquidation

2,378

2,810

Exchange rate gain

589

926

57,996

20,875

Valuation allowance

(11,389)

(9,907)

$

46,607

$

10,968

Deferred tax liabilities

Property and equipment

$

(24,425)

$

(3,823)

Exchange rate loss

(4)

(4)

Intangibles

(1,062)

(1,037)

Operating and finance leases

(4,485)

(7,726)

Unremitted foreign subsidiary earnings

(1,225)

—

Others

(609)

(592)

$

(31,810)

$

(13,182)

Long-term deferred tax asset (liability)

$

14,797

$

(2,214)

The Company has analyzed filing positions in all of the US federal, state and foreign jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The Company has identified its US federal tax return, its state tax returns in Colorado, Missouri, West Virginia and Maryland and its foreign tax returns in Canada and Poland as “major” tax jurisdictions, as defined by the Internal Revenue Code.

The Company is currently under tax audits in Canada for two of its subsidiaries. Any adjustment made by a taxing authority in the future could impact the effective tax rate.

The Company’s income tax returns for the following periods are currently subject to examination:

Jurisdiction

Periods

US Federal

2017(1), 2020-2022

US State - Colorado

2019-2022

US State – Missouri

2020-2022

US State – West Virginia

2020-2022

Canada

2008-2022

Mauritius

2020-2022

Poland

2018-2022

Austria

2018-2022

(1)The 2017 tax period subject to examination only applies to the Company’s transition tax liability in the United States.

The Company had income tax net operating loss carryforwards related to its domestic and international operations of approximately $61.7 million as of December 31, 2023. The Company had recorded $13.0 million of deferred tax assets related to the net operating loss carryforwards, excluding the impact of the adjustments of valuation allowances and unrecognized tax benefits. The deferred tax assets expire as follows:

Amounts in thousands

2023 - 2033

$

153

2034 - 2043

8,747

No expiration

4,050

Total deferred tax assets

$

12,950

Certain net operating loss carryforwards in the Company’s filed income tax returns include unrecognized tax benefits. The deferred tax assets recognized for those net operating loss carryforwards are presented net of these unrecognized tax benefits.

As of December 31, 2023, the Company has accumulated undistributed earnings generated by its foreign subsidiaries that significantly exceed the approximately $118.0 million of cash and cash equivalents held by its foreign subsidiaries. Because substantially all of these accumulated undistributed earnings have previously been subject to the one-time transition tax on foreign earnings required by the Tax Act or have been subject to tax under the GILTI regime, any additional taxes due with respect to such earnings or the excess of the amount for financial reporting over the tax basis of the Company’s foreign investments would generally be limited to foreign withholding and the tax effect of current gains or losses. Historically, the Company has intended to indefinitely reinvest these earnings in its foreign subsidiaries. Following the completion of the Canada Real Estate Sale with VICI PropCo, the Company intends to repatriate a portion of its Canadian current earnings for use in the US. As such, the Company has recorded a deferred tax liability of $3.6 million in anticipation of the foreign withholding tax required on a cash dividend to the US. Absent a need for additional funds in the US, management intends to indefinitely reinvest the historical earnings in Canada and other foreign jurisdictions.

As of December 31, 2023, the Company’s unrecognized tax benefit totaled $0.5 million due to the Company’s ability to utilize pre-acquisition net operating losses. The net increase in the current year unrecognized tax benefit is due to a change in foreign exchange rates. A portion of this adjustment has been recorded as a component of taxes payable in the accompanying consolidated balance sheet as of December 31, 2023. The Company received notification of an examination by Canada Revenue Agency and will assess the ability to recognize $0.5 million in income tax benefits upon completion of the examination, which is anticipated to conclude during 2024. The recognition of the income tax benefits would affect the effective tax rate. The Company’s total amount of unrecognized tax benefit and changes to unrecognized tax benefit during the years ended December 31, 2023 and 2022 are summarized in the table below:

Amounts in thousands

2023

2022

Unrecognized tax benefit - January 1

$

528

$

777

Gross increases - tax positions in prior period

11

—

Gross decreases - tax positions in prior period

—

(31)

Gross increases - tax positions in current period

—

—

Settlements

—

—

Lapse of statute of limitations

—

(218)

Unrecognized tax benefit - December 31

$

539

$

528

The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. Related to the unrecognized tax benefits noted above, the Company accrued penalties and interest of $0.1 million during 2023.