Income Taxes

12 Months Ended

Dec. 31, 2021

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)	2021		2020		2019
Federal:
Current	$	161	$	55	$	64
Deferred	9,837		5,840		2,654
Total federal	9,998		5,895		2,718
State:
Current	(1,835)		(11,247)		(449)
Deferred (included in federal above)	—		—		—
Total state	(1,835)		(11,247)		(449)
Total	$	8,163	$	(5,352)	$	2,269

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)	2021		2020		2019
Tax benefit (provision) at U.S. statutory rate	$	22,565	$	(18,348)	$	56,742
State taxes, net of federal income tax	7,673		(11,909)		10,423
Valuation allowance	13,027		27,913		(60,376)
Goodwill derecognition	(31,829)		—		—
Stock compensation	(1,856)		(2,118)		(2,639)
Officer compensation	(1,107)		(280)		(204)
Meals and entertainment	(146)		(169)		(416)
Other	(164)		(441)		(1,261)
Total	$	8,163	$	(5,352)	$	2,269

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

	As of December 31,
(in thousands)	2021		2020
Deferred income tax assets:
Operating loss carryforwards	$	281,384	$	237,728
Operating lease obligations	208,460		322,122
Financing lease obligations	87,992		90,011
Accrued expenses	56,151		96,410
Intangible assets	50,576		60,069
Tax credits	50,415		50,356
Investment in unconsolidated ventures	—		5,105
Capital loss carryforward	2,205		2,263
Other	6,450		8,561
Total gross deferred income tax asset	743,633		872,625
Valuation allowance	(367,963)		(380,990)
Net deferred income tax assets	375,670		491,635
Deferred income tax liabilities:
Property, plant and equipment	(202,103)		(223,703)
Operating lease right-of-use assets	(158,237)		(277,489)
Investment in unconsolidated ventures	(15,051)		—
Total gross deferred income tax liability	(375,391)		(501,192)
Net deferred tax asset (liability)	$	279	$	(9,557)

As of December 31, 2021 and 2020, the Company had federal net operating loss carryforwards generated in 2017 and prior of approximately $808.7 million and $812.0 million, respectively, which are available to offset future taxable income from 2022 through 2037. Additionally, as of December 31, 2021 and 2020, the Company had federal net operating loss carryforwards generated after 2017 of $335.8 million and $181.1 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 of $2.2 million and $2.3 million as of December 31, 2021 and 2020, respectively, 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, 2021 and 2020. The Company does not consider estimates of future taxable income in its determination due to the existence of cumulative historical operating losses. For the years ended December 31, 2021 and 2020, the Company recorded a reduction to the valuation allowance of approximately $13.0 million and $27.9 million, respectively, to reflect the required valuation allowance of $368.0 million and $381.0 million as of December 31, 2021 and 2020, respectively.

The Company has recorded valuation allowances of $315.3 million and $328.4 million against its federal and state net operating losses as of December 31, 2021 and 2020, respectively. The Company has recorded a valuation allowance against its state capital loss carryforward of $2.2 million as of December 31, 2021. 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 $95.2 million for the year ended December 31, 2021 as a result of the HCS Sale that occurred on July 1, 2021, offset by an increase in the valuation allowance of $82.2 million established against current operating losses during the year ended December 31, 2021. The Company also recorded a valuation allowance against federal and state credits of $50.4 million and $50.3 million as of December 31, 2021 and 2020, respectively.

As of December 31, 2021 and 2020, the Company had gross tax affected unrecognized tax benefits of $18.1 million and $18.4 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, 2021 and 2020. As of December 31, 2021, the Company's tax returns for years 2017 through 2020 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 2021 and prior years will significantly change in 2022.

A reconciliation of the unrecognized tax benefits is as follows.

	For the Years Ended December 31,
(in thousands)	2021		2020
Balance at beginning of period	$	18,385	$	18,326
Additions for tax positions related to the current year	—		—
Additions (reductions) for tax positions related to prior years	(296)		59
Balance at end of period	$	18,089	$	18,385