INCOME TAXES

12 Months Ended

Dec. 31, 2021

INCOME TAXES [Abstract]

INCOME TAXES

13. INCOME TAXES

Components of the provision (benefit) for income taxes were as follows:

	Year Ended December 31,
	2021		2020
Current:
Federal	$	665	$	-
State		535		802
Total		1,200		802
Deferred:
Federal		8,468		(21,743	)
State		2,860		(14,118	)
Total		11,328		(35,861	)
Total provision (benefit)	$	12,528	$	(35,059	)

Effective Tax rate

The reconciliation of the effective tax rate to the U.S. Statutory Federal Income tax rate was:

	Year Ended December 31,
	2021					2020
Income before taxes	$	47,246				$	13,506
Expected tax	$	9,922		21.0	%	$	2,836		21.0	%
State tax benefit (net of federal)		2,682		5.7	%		(10,513	)	-77.8	%
Valuation allowance		-		0.0	%		(27,420	)	-203.0	%
Other		(76	)	-0.2	%		38		0.2	%
Total	$	12,528		26.5	%	$	(35,059	)	-259.6	%

Our income tax provision for the year ended December 31, 2021 was $12.5 million compared to an income tax benefit of $35.1 million in the prior year.  The tax benefit primarily related to a full release of our valuation allowance on deferred tax assets as of December 31, 2020.

Deferred Taxes and Valuation Allowance

The components of the non-current deferred tax assets (liabilities) were as follows:

	At December 31,
	2021			2020
Gross noncurrent deferred tax assets (liabilities)
Lease liability	$	26,142		$	16,369
Depreciation		10,551			11,298
Allowance for bad debts		8,525			7,659
Net operating loss carryforwards		2,394			13,480
Stock-based compensation		641			317
Accrued benefits		656			1,208
Pension plan liabilities		429			1,137
Other intangibles		70			100
Goodwill		(1,267	)		(1,091	)
Right-of-use asset		(24,433	)		(14,759	)
Noncurrent deferred tax assets, net		23,708			35,718

As of December 31, 2021, the Company has gross net operating losses (“NOL”) of $1.2 million and $37.6 million for federal and state tax purposes as of December 31, 2021 compared million for federal and state tax purposes, respectively. The federal NOLs can be carryforward indefinitely. While some states follow federal NOL which can be carried forward indefinitely, majority of the state NOLs expires in 2033 and ending in 2037 if not utilized.

As of December 31, 2020, the Company has gross NOL of $43.1 million and $77.2 million for federal and state tax purposes, respectively. The federal NOL of $29.1 million will expire in 2029 and ending in 2038. Remaining federal NOL of $14 million can be carryforward indefinitely. While some states follow federal NOL which can be carried forward indefinitely, majority of the state NOLs expires in 2033 and ending in 2037 if not utilized. 

The Utilization of the NOL carryforwards may be subject to a substantial limitation due to ownership change limitations that may occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), as well as similar state and foreign provisions. These ownership changes may limit the amount of NOL and tax credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain shareholders or public groups.