Note 6 - Income Taxes

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE 6—INCOME TAXES:

The Company recorded its provision for income taxes for the three months ended March 31, 2022 of ($3,522), or 44.2% of earnings before income taxes, based on its annual estimated income tax rate adjusted for discrete items. The effective tax rate for the three months ended March 31, 2022 differs from the U.S. federal statutory rate of 21%, primarily due to $2,295 of discrete tax benefits related to equity compensation, as well as effective tax rate impacts of excess percentage depletion and foreign derived intangible income, partially offset by compensation. 

The provision for income taxes for the three months ended March 31, 2021 was $5,185, or 16.4% of earnings before income taxes, based on the actual year-to-date effective rate. The income tax provision for interim periods is generally determined using an estimate of the Company's annual effective tax rate and adjusting for discrete items. However, due to operating activities in 2021 and considering the significant benefit from excess percentage depletion, estimating a reliable annual effective tax rate was difficult as small changes to forecasted results could produce significant changes to the Company's annual effective tax rate. Therefore, the Company determined the actual year-to-date effective tax rate was the best estimate for the reporting period. The effective tax rate for the three months ended March 31, 2021 differed from the U.S. federal statutory rate of 21%, primarily due to $339 of discrete tax expense related to equity compensation, as well as the effective tax rate impacts of excess percentage depletion, partially offset by compensation.

Due to the expectation of taxable income for the year 2022, the Company has recognized a benefit of $937 related to the release of a valuation allowance for state tax net operating losses in its annual effective tax rate for the three months ended March 31, 2022.

The Company is subject to taxation in the United States and its various states, as well as Canada and its various provinces. The Company is subject to examination for the tax periods 2018 through 2021 for federal and state returns.