Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

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 years ended December 31, 2021, 2020 and 2019 consisted of (in thousands):

	2021		2020		2019
Current:
Federal	$	74,124	$	38,843	$	10,605
State		23,890		12,294		4,080
Deferred:
Federal		13,024		5,016		9,140
State		(18,914)		1,590		5,757
Income tax expense	$	92,124	$	57,743	$	29,582

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 years ended December 31, 2021, 2020 and 2019 were as follows (in thousands):

	2021		2020		2019
Income taxes computed at federal statutory rate(1)	$	154,182	$	84,411	$	(19,051)
State income taxes – net of federal benefit(1)		15,261		3,741		(4,728)
Other differences:
State and local taxes on pass-through entities		5,004		2,965		937
Income taxes computed at the effective federal and state statutory rate for pass-through entities not subject to tax for the Company (2)		(81,013)		(53,147)		(22,089)
Tax benefit from of transfer assets(3)		—		—		(14,170)
Increase in valuation allowance due to transfer of assets(3)		—		—		26,350
(Decrease) increase in valuation allowance(4)		(2,234)		19,058		59,552
Impact of other state tax rate changes		1,927		(915)		1,653
Other		(1,003)		1,630		1,128
Income tax expense	$	92,124	$	57,743	$	29,582

(1) Federal and state income tax for 2021 and 2019 includes $0.7 million of income tax expense and $2.5 million of income tax benefit, respectively, relating to the revaluation in the Tax Receivable Agreement liability due to fluctuations in state income tax rates. The amount related to 2020 was insignificant.

(2) The related income is taxable to the non-controlling 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) As a result of CWH’s ownership of CWGS increasing above 50% during the first quarter of 2021, the amount for the year ended December 31, 2021 included a decrease in the valuation allowance of Camping World Inc. (“CW”) in certain state deferred tax assets of $15.2 million. Additionally, for the year ended December 31, 2021, this amount was partially offset by $13.0 million of increases to the valuation allowance primarily resulting from losses of CW for which no benefit is recognized for the U.S. federal and non-unitary states.

Summary of significant items comprising the net deferred tax asset

	2021		2020
Deferred tax liabilities
Operating lease assets	$	(63,143)	$	(67,400)
Other		(3,456)		(4,623)
		(66,599)		(72,023)
Deferred tax assets
Investment impairment		20,619		22,169
Investment in partnership ("Outside Basis Deferred Tax Asset")(1)		271,513		241,805
Tax Receivable Agreement liability		46,328		36,486
Net operating loss carryforward		137,377		124,117
Operating lease liabilities		73,476		79,639
Other reserves		28,695		29,461
		578,008		533,677
Valuation allowance		(312,088)		(295,946)
Net deferred tax assets	$	199,321	$	165,708

(1) This amount is the deferred tax asset the Company recognizes for its book to tax basis difference in its investment in CWGS, LLC.