INCOME TAXES

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

12.INCOME TAXES

Income tax benefit from continuing operations for the years ended December 31, 2021 and 2020 consisted of the following (in thousands):

	Years Ended December 31,
	2021			2020
Current provision:
State	$	(65	)	$	(60	)
Federal		—			—
Foreign		(343	)		25
Total		(408	)		(35	)
Deferred provision:
State		3,147			(62	)
Federal		15,482			4,856
Foreign		149			96
Total		18,778			4,890
Total income tax benefit	$	18,370		$	4,855

A reconciliation of the federal statutory tax rate to the Company’s effective tax rate is as follows:

	Years Ended December 31,
	2021			2020
U.S. statutory income tax rate		21.0	%		21.0	%
State and local taxes, net of federal income tax benefit		3.0	%		0.1	%
Tax exempt (income) loss		0.1	%		(2.1	)%
Valuation allowance		0.8	%		7.0	%
Divestiture impact on valuation allowance		—	%		(14.4	)%
Permanent differences		(0.5	)%		(0.1	)%
Effective tax rate		24.4	%		11.5	%

During 2020, the Company received a benefit for federal purposes associated with filing a consolidated return which allows income and losses to be offset among the members of the affiliated group. During 2021, the effective tax rate increased due to net operating losses and benefits from deferred tax assets associated with recognizing revenue more rapidly for tax purposes than for financial statement purposes. The primary deferred liabilities in both 2020 and 2021 will reverse over the lives of the various cemeteries, which range from an average 100 to 300 years.

The components of the Company’s deferred tax assets and liabilities were as follows (in thousands):

	December 31,
	2021			2020
Deferred tax assets:
Prepaid expenses	$	10,619		$	15,780
State net operating loss		33,809			26,015
Federal net operating loss		100,093			86,651
Foreign net operating loss		4,604			9,171
Other		17			51
Valuation allowance		(101,447	)		(101,629	)
Total deferred tax assets		47,695			36,039
Deferred tax liabilities:
Property, plant and equipment		31,423			30,880
Deferred revenue related to future revenues and accounts receivable		21,725			29,480
Deferred revenue related to cemetery property		5,404			5,322
Total deferred tax liabilities		58,552			65,682
Net deferred tax liabilities	$	10,857		$	29,643

Net deferred tax assets and liabilities were classified on the consolidated balance sheets as follows (in thousands):

	December 31,
	2021		2020
Deferred tax assets	$	21	$	9
Noncurrent assets		21		9
Deferred tax assets		47,674		36,030
Deferred tax liabilities		58,552		65,682
Noncurrent liabilities		10,878		29,652
Net deferred tax liabilities	$	10,857	$	29,643

At December 31, 2021, the Company had available approximately $17,000 of alternative minimum tax credit carryforwards and approximately $477.0 million and $618.0 million of federal and state net operating loss (“NOL”) carryforwards, respectively, a portion of which expires annually.

Management periodically evaluates all evidence both positive and negative in determining whether a valuation allowance to reduce the carrying value of deferred tax assets is required. The vast majority of the Company’s taxable subsidiaries continue to accumulate deferred tax assets that on a more likely than not basis will not be realized. A full valuation allowance continues to be maintained on these taxable subsidiaries. Along with other previous transfers of the Company’s interests, the Company believes the Recapitalization Transactions in June 2019 caused a “change of control” for income tax purposes, which significantly limits the Company’s ability to use NOLs and certain other tax assets to offset future taxable income.

At December 31, 2021, based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believed it was more likely than not that the Company will realize the benefits of these deductible differences. The amount of deferred tax assets considered realizable could be reduced in the future if estimates of future taxable income during the carryforward period are reduced.

In accordance with applicable accounting standards, the Company recognizes only the impact of income tax positions that, based upon their merits, are more likely than not to be sustained upon audit by a taxing authority. To evaluate its current tax positions in order to identify any material uncertain tax positions, the Company developed a policy of identifying and evaluating uncertain tax positions that considers support for each tax position, industry standards, tax return disclosures and schedules and the significance of each position. It is the Company’s policy to recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense in the consolidated statements of operations. At December 31, 2021 and 2020, the Company had no material uncertain tax positions.

The Company is not currently under tax examination by any federal jurisdictions or state income tax jurisdictions. In general, the federal statute of limitations and certain state statutes of limitations are open from 2016 forward. For entities with net operating loss carryovers the statute of limitations is extended to 2013 to the extent of the net operating loss carryover.