Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The benefit (provision) for income taxes is comprised of the following:

	For the Years Ended December 31,
(in thousands)	2020		2019		2018
Federal:
Current	$	55	$	64	$	(113)
Deferred	5,840		2,654		52,367
Total federal	5,895		2,718		52,254
State:
Current	(11,247)		(449)		(2,798)
Deferred (included in federal above)	—		—		—
Total state	(11,247)		(449)		(2,798)
Total	$	(5,352)	$	2,269	$	49,456

A reconciliation of the benefit (provision) for income taxes to the amount computed at the U.S. Federal statutory rate of 21% is as follows:

	For the Years Ended December 31,
(in thousands)	2020		2019		2018
Tax benefit (provision) at U.S. statutory rate	$	(18,348)	$	56,742	$	121,320
State taxes, net of federal income tax	(11,909)		10,423		21,576
Valuation allowance	27,913		(60,376)		5,713
Goodwill impairment	—		—		(88,265)
Impact of the Tax Cuts and Jobs Act	—		—		(6,042)
Stock compensation	(2,118)		(2,639)		(4,717)
Meals and entertainment	(169)		(416)		(493)
Tax credits	—		(106)		688
Other	(721)		(1,359)		(324)
Total	$	(5,352)	$	2,269	$	49,456

Significant components of the Company's deferred tax assets and liabilities are as follows:

	As of December 31,
(in thousands)	2020		2019
Deferred income tax assets:
Operating lease obligations	$	322,122	$	406,172
Financing lease obligations	90,011		156,913
Operating loss carryforwards	237,728		330,983
Accrued expenses	96,410		54,154
Intangible assets	60,069		11,160
Tax credits	50,356		50,356
Investment in unconsolidated ventures	5,105		—
Capital loss carryforward	2,263		40,723
Other	8,561		8,098
Total gross deferred income tax asset	872,625		1,058,559
Valuation allowance	(380,990)		(408,903)
Net deferred income tax assets	491,635		649,656
Deferred income tax liabilities:
Operating lease right-of-use assets	(277,489)		(328,100)
Property, plant and equipment	(223,703)		(303,853)
Investment in unconsolidated ventures	—		(33,100)
Total gross deferred income tax liability	(501,192)		(665,053)
Net deferred tax asset (liability)	$	(9,557)	$	(15,397)

As of December 31, 2020 and 2019, the Company had federal net operating loss carryforwards generated in 2017 and prior of approximately $812.0 million and $1.2 billion, respectively which are available to offset future taxable income from 2021 through 2037. Additionally, as of December 31, 2020 and 2019, the Company had federal net operating loss carryforwards generated after 2017 of $181.1 million and $174.9 million, respectively, which have an indefinite life, but with usage limited to 80% of taxable income in any given year. The Company had state capital loss carryforwards as of December 31, 2020, which are available to offset future capital gains through 2023. The Company determined that a valuation allowance was required after consideration of the Company's estimated future reversal of existing timing differences as of December 31, 2020 and 2019. The Company does not consider estimates of future taxable income in its determination due to the existence of cumulative historical operating losses. For the year ended December 31, 2020, the Company recorded a reduction of approximately $27.9 million to reflect the required valuation allowance of $381.0 million as of December 31, 2020.

A summary of the change in the Company's valuation allowance is as follows:

	For the Years Ended December 31,
(in thousands)	2020		2019
Increase (decrease) before consideration of adoption of ASC 842	$	(27,913)	$	60,376
Increase due to the adoption of ASC 842	—		13,790
Other decrease during the year	—		(1,680)
Total increase (decrease) in valuation allowance	$	(27,913)	$	72,486

The Company has recorded valuation allowances of $328.4 million and $318.4 million against its federal and state net operating losses as of December 31, 2020 and 2019, respectively. The Company has recorded a valuation allowance against its state capital loss carryforward of $2.3 million as of December 31, 2020. The Company had recorded a valuation allowance against its federal and state capital loss carryforwards of $40.7 million as of December 31, 2019. The Company's sale of its ownership interest in the CCRC Venture in 2020 utilized all of the capital loss carryforward for federal tax purposes and a portion of its net operating losses. The Company recorded a decrease in the valuation allowance of $117.6 million for the year ended December 31, 2020 as a result of the Healthpeak transaction. The Company also recorded a valuation allowance against federal and state credits of $50.3 million as of both December 31, 2020 and 2019.

As of December 31, 2020 and 2019, the Company had gross tax affected unrecognized tax benefits of $18.4 million and $18.3 million, respectively, of which, if recognized, would result in an income tax benefit recorded in the consolidated statement of operations. Interest and penalties related to these tax positions are classified as tax expense in the Company's consolidated financial statements. Total interest and penalties reserved is $0.1 million as of both December 31, 2020 and 2019. As of December 31, 2020, the Company's tax returns for years 2016 through 2019 are subject to future examination by tax authorities. In addition, the net operating losses from prior years are subject to adjustment under examination. The Company does not expect that unrecognized tax benefits for tax positions taken with respect to 2020 and prior years will significantly change in 2021.

A reconciliation of the unrecognized tax benefits is as follows:

	For the Years Ended December 31,
(in thousands)	2020		2019
Balance at beginning of period	$	18,326	$	18,507
Additions for tax positions related to the current year	—		—
Additions (reductions) for tax positions related to prior years	59		(181)
Balance at end of period	$	18,385	$	18,326