Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The provision for income taxes is comprised of (in thousands):

	Years ended December 31,
	2021		2020		2019
Current:
Federal	$	27,011	$	33,495	$	14,850
State	10,139		8,918		4,127
	37,150		42,413		18,977
Deferred:
Federal	(437)		(7,177)		4,585
State	(1)		(1,298)		884
	(438)		(8,475)		5,469
Total tax expense	$	36,712	$	33,938	$	24,446

The reconciliation between our effective tax rate on net income and the federal statutory rate is as follows (dollars in thousands):

	Years ended December 31,
	2021				2020				2019
Income tax at federal statutory rate	$	32,650	21.0	%	$	27,547	21.0	%	$	19,447	21.0	%
Stock compensation	(1,567)		(1.0)	%	331		0.3	%	(255)		(0.3)	%
Other permanent items	1,274		0.8	%	424		0.3	%	737		0.8	%
Change in valuation allowance	(922)		(0.6)	%	(207)		(0.2)	%	276		0.3	%
Change in uncertain tax positions	(2,867)		(1.8)	%	65		0.1	%	67		0.1	%
State income taxes, net of federal benefit	8,144		5.2	%	5,778		4.4	%	4,174		4.5	%
Total tax expense	$	36,712	23.6	%	$	33,938	25.9	%	$	24,446	26.4	%

Components of the net deferred tax asset or liability are as follows (in thousands):

	As of December 31,
	2021		2020
Deferred Tax Assets
Long-term
Accrued liabilities and allowances	$	10,200	$	9,106
Allowance for doubtful accounts	979		987
Inventories	900		402
Property and equipment	333		280
Intangibles	7,042		6,582
Net operating loss carryforwards	1,049		1,206
Other	14		16
Long-term deferred tax assets	20,517		18,579
Less: Valuation allowance	(216)		(1,263)
Net deferred tax assets	20,301		17,316
Deferred Tax Liabilities
Long-term
Accrued liabilities and allowances	(669)		(151)
Property and equipment	(7,629)		(4,587)
Intangibles	(6,783)		(4,810)
Investment in partnership	(8,271)		(6,660)
Other	(793)		(650)
Long-term deferred tax liabilities	(24,145)		(16,858)
Net deferred tax (liabilities) assets	$	(3,844)	$	458
The above amounts are included in our Consolidated Balance Sheets as follows:
Other non-current assets	975		493
Long-term deferred income tax liabilities	(4,819)		(35)
Net deferred tax (liabilities) assets	$	(3,844)	$	458

As of December 31, 2021, we had a deferred tax asset balance of $1.0 million reflecting the benefit of $4.8 million in federal and state income tax net operating loss (NOL) carryforwards, the earliest of which expires in 2030.

Valuation Allowance

We assess the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets on a jurisdiction and by tax filing entity basis. A significant piece of objective negative evidence evaluated is cumulative losses incurred over the most recent three-year period. Such objective evidence limits our ability to consider other subjective positive evidence such as our projections for future growth.

Based on this evaluation, a valuation allowance has been recorded as of December 31, 2021 and 2020 for the net deferred tax assets recorded on certain of our wholly owned subsidiaries. Such deferred tax assets relate primarily to net operating losses that are not more likely than not realizable. However, the amount of the deferred tax asset considered realizable could be adjusted if our estimate of future taxable income during the carryforward period changes, or if objective negative evidence in the form of cumulative losses is no longer present. Additional weight may be given to subjective evidence such as our projections for growth in this situation.

Uncertain Tax Positions

We are subject to taxation in the United States and various state jurisdictions. As of December 31, 2021, our tax years for 2018 through 2020 are subject to examination by the tax authorities. A rollforward of the gross unrecognized tax benefits is as follows (in thousands):

Unrecognized tax benefit, January 1, 2019	$	5,349
Increase as a result of tax positions taken during the period	2,866
Decrease as a result of tax positions taken during the period	(2,482)
Decrease as a result of expiring statutes	(16)
Unrecognized tax benefit, December 31, 2019	$	5,717
Increase as a result of tax positions taken during the period	3,822
Decrease as a result of tax positions taken during the period	(2,873)
Increase as a result of expiring statutes	10
Unrecognized tax benefit, December 31, 2020	$	6,676
Increase as a result of tax positions taken during the period	4,482
Decrease as a result of tax positions taken during the period	(3,999)
Decrease as a result of expiring statutes	(2,857)
Unrecognized tax benefit, December 31, 2021	$	4,302

No unrecognized tax positions would affect the effective tax rate at December 31, 2021. Interest expense and penalties accrued related to uncertain tax positions as of December 31, 2021 are $0.5 million.

We expect a decrease to the amount of unrecognized tax benefits (exclusive of penalties and interest) within the next twelve months of zero to $2.4 million.

Determining uncertain tax positions and the related estimated amounts requires judgment and carry estimation risk. If future tax law changes or interpretations should come to light, or additional information should become known, our conclusions regarding unrecognized tax benefits may change.