Note 14 - Income Taxes

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

14.     Income Taxes

The provision (benefit) for income taxes includes the following: 

	Year Ended December 31,
	2019			2018			2017
	(Dollars in thousands)
Current provision (benefit) for income taxes:
Federal	$	(203	)	$	(67	)	$	10,243
State		(101	)		304			3,030
		(304	)		237			13,273
Deferred provision (benefit) for income taxes:
Federal		(2,933	)		(4,208	)		2,341
State		(578	)		(2,104	)		(224	)
		(3,511	)		(6,312	)		2,117
Provision (benefit) for income taxes	$	(3,815	)	$	(6,075	)	$	15,390

The effective tax rate differs from the federal statutory rate of 21% for the years ended December 31, 2019 and 2018 and 35% for the year ended December 31, 2017, due to the following items:

	Year Ended December 31,
	2019			2018			2017
	(Dollars in thousands)
Income (loss) before taxes of taxable entities	$	(11,816	)	$	(20,305	)	$	32,531
(Provision) benefit for income taxes at federal statutory rate	$	2,481		$	4,264		$	(11,386	)
(Increases) decreases in tax resulting from:
Provisional rate adjustment - tax reform		—			148			(3,190	)
State income taxes, net of federal benefit		781			1,396			(1,860	)
Manufacturing deduction		—			—			958
Tax credits		1,238			346			—
Stock compensation		(389	)		(12	)		(44	)
Non-deductible expenses related to Section 162(m)		(163	)		—			—
Other		(133	)		(67	)		132
(Provision) benefit for income taxes	$	3,815		$	6,075		$	(15,390	)
Effective tax rate		32.3	%		29.9	%		47.3	%

With the enactment of the Tax Cuts and Jobs Act (the "Tax Act"), the corporate federal income tax rate dropped from a maximum of 35% to a flat 21% rate effective January 1, 2018. The SEC staff issued Staff Accounting Bulletin 118 ("SAB 118"), which provided guidance on accounting for the tax effects of the Tax Act and provided a measurement period should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. As of December 31, 2017, we had completed the majority of our accounting for the tax effects of the Tax Act. As a result of the rate change, the Company was required to revalue its net deferred tax asset at December 31, 2018 and recorded a provisional adjustment to reduce its value by $3.2 million. The Company completed its accounting for the tax effects of the Tax Act in 2018, within the one-year measurement period prescribed by the SEC, and recorded a $0.1 million adjustment to the provisional amount.

The components of our deferred income tax asset, net are as follows:

	December 31,
	2019			2018
	(Dollars in thousands)
State taxes	$	3		$	74
Net operating loss and tax credit carryforwards		3,848			—
Reserves and accruals		2,563			2,258
Intangible assets		24			28
Share based compensation		1,392			1,594
Inventory		3,536			3,699
Investments in joint ventures		7,080			6,318
Depreciation and amortization		(393	)		(34	)
Right of use asset		(550	)		—
Deferred tax asset, net	$	17,503		$	13,937

At December 31, 2019, the Company had federal and state net operating loss carryforwards of approximately $9.0 million and $4.9 million, respectively.  The federal net operating loss may be carried forward indefinitely; however the loss can only be utilized to offset 80% of taxable income generated in a year.  Our state net operating loss may be carried forward 20 years and will expire in 2039, unless previously utilized. 

At December 31, 2019, the Company had federal tax credits of approximately $1.6 million related to tax credits for energy efficient homes sold during 2018 and 2019 that begin to expire in 2039. 

The Company classifies any interest and penalties related to income taxes assessed as part of income tax provision. The Company has concluded that there were no significant uncertain tax positions requiring recognition in its financial statements, nor has the Company been assessed interest or penalties by any major tax jurisdictions related to any open tax periods. We are subject to U.S. federal income tax examination for calendar tax years ending 2016 through 2018 and various state income tax examinations for 2015 through 2018 calendar tax years.