Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Taxes

Schedule of components of the Company's income tax expense

The components of the Company’s income tax expense from operations for the year ended December 31, consisted of (in thousands):

	2019		2018		2017
Current:
Federal	$	10,605	$	13,828	$	19,496
State		4,080		5,598		4,448
Deferred:
Federal		9,140		11,970		97,792
State		5,757		(606)		33,174
Income tax expense	$	29,582	$	30,790	$	154,910

Schedule of reconciliation of income tax expense from operations to the federal statutory rate

A reconciliation of income tax expense from operations to the federal statutory rate for the year ended December 31, is as follows (in thousands):

	2019		2018		2017
Income taxes computed at federal statutory rate(1)	$	(19,051)	$	20,238	$	134,961
State income taxes – net of federal benefit(1)		(4,728)		4,313		13,570
Other differences:
Federal alternative minimum tax and state and local taxes on pass-through entities		937		1,076		1,072
Income taxes computed at the effective federal and state statutory rate for pass-through entities not subject to tax for the Company (2)		(22,089)		(41,367)		(84,747)
Tax benefit from of transfer assets(3)		(14,170)		—		—
Increase in valuation allowance due to transfer of assets(3)		26,350		—		—
Increase in valuation allowance		59,552		43,175		11,194
Impact of 2017 Tax Act (4)		—		—		78,222
Impact of other state tax rate changes		1,653		(2,020)		—
Goodwill impairment		—		6,158		—
Other		1,128		(783)		638
Income tax expense	$	29,582	$	30,790	$	154,910

(1) Federal and state income tax for 2019, 2018 and 2017 include the tax effect of $2.5 million of income tax benefit, $0.3 million of income tax expense and $38.8 million of income tax benefit, respectively, relating to the revaluation in the Tax Receivable Agreement liability.

(2) The related income is taxable to the noncontrolling interest.

(3) These amounts represent the net income tax expense of $12.2 million (composed of an increase in the valuation allowance against the Company’s overall deferred tax assets of $26.4 million, offset by the income tax benefit associated with the transferred assets of $14.2 million) related to the transfer of certain assets, including the Good Sam Club and co-branded credit cards as discussed below.

(4) Excludes the tax effect of $2.5 million of income tax benefit, $0.3 million of income tax expense and $38.8 million of income tax benefit for 2019, 2018 and 2017, respectively, relating to the revaluation in the Tax Receivable Agreement liability, which is included in federal and state tax.

Summary of significant items comprising the net deferred tax asset

Significant items comprising the net deferred tax assets at December 31, were (in thousands):

	2019		2018
Deferred tax liabilities
Accelerated depreciation	$	(3)	$	(6,468)
Prepaid expenses		(1,676)		(1,238)
Intangible assets		(3,704)		(3,474)
Operating lease assets		(71,221)		—
Lease incentives		(5,226)		—
		(81,830)		(11,180)
Deferred tax assets
Investment impairment		21,601		21,974
Inventory-related		5,029		6,479
Gift cards		1,385		1,478
Deferred revenues		6,859		322
Accrual for employee benefits and severance		1,555		1,401
Stock option expense		(10)		440
Investment in partnership		203,663		208,749
Tax Receivable Agreement liability		28,715		34,184
Net operating loss carryforward		114,617		51,654
Claims reserves		114		126
Intangible assets		2,086		547
Goodwill		2,396		3,836
Deferred book gain		—		770
Accelerated depreciation		1,002		—
Operating lease liabilities		82,785		—
Other reserves		6,195		6,146
		477,992		338,106
Valuation allowance		(266,452)		(180,983)
Net deferred tax assets	$	129,710	$	145,943