Income Taxes

9 Months Ended

Sep. 30, 2020

(7) 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 September 30, 2020 and December 31, 2019.

(Dollars in thousands)	September 30, 2020			December 31, 2019
Goodwill and other intangibles	$	(45,302	)	$	(45,595	)
Provision for loan losses		28,636			19,198
Net operating loss carryforwards⁽¹⁾		26,469			22,607
Accrued expenses, compensation, and other assets		997			1,701
Unrealized gains on other investments		(8,690	)		(6,790	)
Total deferred tax asset (liability)		2,110			(8,879	)
Valuation allowance		(462	)		(462	)
Deferred tax asset (liability), net		1,648			(9,341	)
Taxes receivable		1,639			1,516
Net deferred and other tax assets (liabilities)	$	3,287		$	(7,825	)

(1)	As of September 30, 2020, the Company and its subsidiaries had an estimated $101,627 of net operating loss carryforwards, $1,712 of which expire at various dates between December 31, 2026 and December 31, 2035, which had a net carrying value of $26,007 as of September 30, 2020.

The components of our tax (provision) benefit for the three and nine months ended September 30, 2020 and 2019 were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2020			2019			2020			2019
Current
Federal	$	—		$	(230	)	$	—		$	(1,099	)
State		(83	)		(661	)		(306	)		(1,620	)
Deferred
Federal		5,940			(887	)		9,239			1,311
State		2,524			1,613			3,550			3,334
Net (provision) benefit for income taxes	$	8,381		$	(165	)	$	12,483		$	1,926

The following table presents a reconciliation of statutory federal income tax (provision) benefit to consolidated actual income tax (provision) benefit for the three and nine months ended September 30, 2020 and 2019.

	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2020			2019			2020			2019
Statutory Federal income tax (provision) benefit at 21%	$	5,967		$	(1,616	)	$	10,034		$	(332	)
State and local income taxes, net of federal income tax benefit		1,201			(547	)		1,961			(113	)
Revaluation of net operating losses		—			876			—			380
Change in state income tax accruals		—			—			—			600
Change in effective state income tax rate		(939	)		608			(790	)		916
Income attributable to non-controlling interest		522			451			356			451
Non deductible expenses		(211	)		—			(1,000	)		—
Other		1,841			63			1,922			24
Total income tax (provision) benefit	$	8,381		$	(165	)	$	12,483		$	1,926

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 September 30, 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 2016 through the present are the more significant filings that are open for examination. Currently, the Company is undergoing various examinations covering the years 2016 to 2018.

- 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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