INCOME TAXES

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Income tax expense (benefit) consisted of the following:

	Federal		State		Total
2023
Current	$	—	$	3	$	3
Deferred	508		(7,292)		(6,784)
Total income tax	$	508	$	(7,289)	$	(6,781)
2022
Current	$	1,857	$	3	$	1,860
Deferred	4,726		(211)		4,515
Total income tax	$	6,583	$	(208)	$	6,375
2021
Current	$	—	$	3,446	$	3,446
Deferred	3,322		(2,676)		646
Total income tax	$	3,322	$	770	$	4,092

The Company's December 31, 2023, 2022, and 2021 qualified tax repairs and maintenance deductions totaled $169.7 million, $128.0 million, and $125.5 million, respectively.

At December 31, 2023, the Company had U.S. federal and U.S. state tax net operating loss carry-forwards of approximately $93.3 million and $184.0 million respectively. The U.S. federal and U.S. state net operating loss carry-forwards will both expire at various dates beginning in tax year 2028.

The difference between the recorded and the statutory income tax expense is reconciled in the table below:

	2023		2022		2021
Statutory income tax	$	9,365	$	21,344	$	22,065
Increase (reduction) in taxes due to:
State income taxes net of federal tax benefit	3,718		7,383		7,334
Effect of regulatory treatment of fixed asset differences	(9,478)		(6,274)		(6,327)
Investment tax credits	(74)		(74)		(74)
AFUDC equity	(1,553)		(1,155)		(891)
Stock based stock compensation	677		455		791
TCJA refund	(11,618)		(13,919)		(19,417)
Other	2,182		(1,385)		611
Total income tax	$	(6,781)	$	6,375	$	4,092

The effect of regulatory treatment of fixed asset differences includes estimated repair and maintenance deductions and asset related flow through items.

On December 22, 2017, the U.S. government enacted expansive tax legislation commonly referred to as the TCJA. Among other provisions, the TCJA reduces the federal income tax rate from 35 percent to 21 percent beginning on January 1, 2018 and eliminated bonus depreciation for utilities. The TCJA required the Company to re-measure all existing deferred income tax assets and liabilities to reflect the reduction in the federal tax rate.

As of December 31, 2023, the TCJA refund liability was $92.5 million. The Company continues working with other state regulators to finalize the refund to confirm compliance with federal normalization rules.

The deferred tax assets and deferred tax liabilities as of December 31, 2023 and 2022, are presented in the following table:

	2023		2022
Deferred tax assets:
Developer deposits for contributions in aid of construction	$	33,244	$	31,589
Net operating loss carry-forward and tax credits	29,406		18,329
Pension liability	16,896		13,860
Income tax regulatory liability	18,364		22,838
Operating leases liabilities	3,796		4,170
Other	3,614		4,264
Total deferred tax assets	105,320		95,050
Deferred tax liabilities:
Property related basis and depreciation differences	437,224		393,007
WRAM/MCBA and interim rates balancing accounts	4,875		14,192
Operating lease-right to use asset	3,746		4,130
Other	12,237		13,972
Total deferred tax liabilities	458,082		425,301
Net deferred tax liabilities	$	352,762	$	330,251

Based on historical taxable income and future taxable income projections over the period in which the deferred assets are deductible, management believes it is more likely than not that the Company will realize the benefits of the deductible differences.

The following table reconciles the changes in unrecognized tax benefits for the periods ended December 31, 2023, 2022, and 2021:

	2023		2022		2021
Balance at beginning of year	$	13,606	$	15,850	$	13,960
Additions for tax positions taken during current year	2,685		1,955		1,890
Lapse of statute of limitations	—		(4,199)		—
Balance at end of year	$	16,291	$	13,606	$	15,850

The Company does not expect a material change in its unrecognized tax benefits within the next 12 months. The component of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of December 31, 2023, was $5.0 million, with the remaining balance representing the potential deferral of taxes to later years.

The Company's federal income tax years subject to an examination are from 2017 to 2023 and the state income tax years subject to an examination are from 2013 to 2023.