Income taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income taxes

Income taxes

The provision (benefit) for income taxes consists of the following (in thousands):

2021	Current		Deferred		Total
Federal	$	114,255	$	15,400	$	129,655
State and other	11,310		(5,484)		5,826
Total	$	125,565	$	9,916	$	135,481

2020	Current		Deferred		Total
Federal	$	123,882	$	4,532	$	128,414
State and other	21,878		4,001		25,879
Total	$	145,760	$	8,533	$	154,293

2019	Current		Deferred		Total
Federal	$	59,791	$	21,345	$	81,136
State and other	7,567		719		8,286
Total	$	67,358	$	22,064	$	89,422

Income before income taxes attributable to TEGNA Inc. consists entirely of domestic income.

The provision for income taxes varies from the U.S. federal statutory tax rate as a result of the following differences:

	2021	2020	2019
U.S. statutory tax rate	21.0%	21.0%	21.0%
Increase (decrease) in taxes resulting from:
State taxes (net of federal income tax benefit)	2.6	3.3	3.1
Uncertain tax positions, settlements and lapse of statutes of limitations	0.3	(0.1)	(1.6)
Other valuation allowances, tax rate changes, & deferred adjustments	(1.7)	(0.1)	(1.7)
Valuation allowance on equity method investment	—	0.4	1.7
Non-deductible transactions costs	0.1	—	0.3
Net excess benefits or expense on share-based payments	(0.2)	(0.1)	0.4
Other, net	—	(0.2)	0.6
Effective tax rate	22.1%	24.2%	23.8%

Deferred income taxes reflect temporary differences in the recognition of revenue and expense for tax reporting and financial statement purposes. Deferred tax liabilities and assets are adjusted for changes in tax laws or tax rates of the various tax jurisdictions as of the enacted date.

Deferred tax liabilities and assets were composed of the following as of December 31, 2021 and 2020 (in thousands):

	Dec. 31,
	2021		2020
Deferred tax liabilities
Accelerated depreciation	$	67,697	$	67,479
Accelerated amortization of deductible intangibles	534,438		536,740
Right-of-use assets for operating leases	21,648		24,220
Other	3,792		3,322
Total deferred tax liabilities	627,575		631,761
Deferred tax assets
Accrued compensation costs	24,147		18,559
Pension and post-retirement medical and life	17,400		25,523
Loss carryforwards	31,841		38,348
Operating lease liabilities	22,582		25,319
Other	25,160		37,239
Total deferred tax assets	121,130		144,988
Deferred tax asset valuation allowance	41,929		43,467
Total net deferred tax (liabilities)	$	(548,374)	$	(530,240)

As of December 31, 2021, we had approximately $74.0 million of capital loss carryforwards for federal and state purposes including $73.0 million of which will expire if not used prior to 2023, and the remainder of which will expire if not used prior to 2027. Capital loss carryforwards can only be utilized to the extent capital gains are recognized. As of December 31, 2021, we have established a valuation allowance on all federal and state capital loss carryforwards. As of December 31, 2021, we also had approximately $10.3 million of state net operating loss carryovers that, if not utilized, will expire in various amounts beginning in 2022 through 2040 and $6.8 million of state interest disallowance carryovers that do not expire.

Included in total deferred tax assets are valuation allowances of approximately $41.9 million as of December 31, 2021 and $43.5 million as of December 31, 2020, primarily related to federal and state capital losses, accrued compensation costs, minority investments, state interest disallowance carryovers, and state net operating losses available for carry forward to future years. If, in the future, we believe that it is more likely than not that these deferred tax assets will be realized, the valuation allowances will be reversed in the Consolidated Statements of Income.

Realization of deferred tax assets for which valuation allowances have not been established is dependent upon generating sufficient future taxable income. We expect to realize the benefit of these deferred tax assets through future reversals of our deferred tax liabilities, through the recognition of taxable income in the allowable carryback and carryforward periods, and through implementation of future tax planning strategies. Although realization is not assured, we believe it is more likely than not that all deferred tax assets for which valuation allowances have not been established will be realized.

The following table summarizes the activity related to deferred tax asset valuation allowances (in thousands):

	2021		2020		2019
Beginning at beginning of period	$	43,467	$	45,661	$	125,894
Additions to valuation allowance	6,108		3,719		9,545
Reductions to valuation allowance	(7,646)		(5,913)		(89,778)
Balance at the end of the period	$	41,929	$	43,467	$	45,661

Tax Matters Agreements

Prior to the May 31, 2017 spin-off of the Cars.com business, we entered into a Tax Matters Agreement with Cars.com Inc. that governs each company’s respective rights, responsibilities, and obligations with respect to tax liabilities and benefits, tax attributes, tax contests and other matters regarding income taxes, non-income taxes and related tax returns. The agreement provides that we will generally indemnify Cars.com against taxes attributable to assets or operations for all tax periods or portions thereof prior to the spin-off date including separately-filed U.S. federal, state, and foreign taxes. Our, 2017 tax year is currently under examination by the Internal Revenue Service and the relevant federal statute of limitations remains open until December 31, 2022.

Uncertain Tax Positions

The following table summarizes the activity related to unrecognized tax benefits, excluding the federal tax benefit of state tax deductions (in thousands):

	2021		2020		2019
Change in unrecognized tax benefits
Balance at beginning of year	$	7,435	$	8,050	$	12,843
Additions for tax positions of prior years	1,363		630		—
Reductions for tax positions of prior years	—		—		(959)
Settlements	—		—		(288)
Reductions due to lapse of statutes of limitations	(602)		(1,245)		(3,546)
Balance as of end of year	$	8,196	$	7,435	$	8,050

The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $6.8 million as of December 31, 2021, and $6.0 million as of December 31, 2020. This amount includes the federal tax benefit of state tax deductions.

We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. We also recognize interest income attributable to overpayment of income taxes and from the reversal of interest expense previously recorded for uncertain tax positions which are subsequently released as a component of income tax expense. We recognized expense from interest for uncertain tax positions of $0.7 million in 2021 while recording income of $1.7 million in 2019. We did not recognize income or expense in 2020. The amount of accrued interest expense and penalties payable related to unrecognized tax benefits was $0.7 million as of December 31, 2021 and $0.1 million as of December 31, 2020.

We file income tax returns in the U.S. and various state jurisdictions. The 2016 through 2021 tax years remain subject to examination by the Internal Revenue Service and state authorities. Tax years before 2016 remain subject to examination by certain states due to ongoing audits.

It is reasonably possible that the amount of unrecognized benefit with respect to certain of our unrecognized tax positions will increase or decrease within the next 12 months. These changes may be the result of settlement of ongoing audits, lapses of statutes of limitations or other regulatory developments. At this time, we estimate the amount of our gross unrecognized tax positions may decrease by up to approximately $0.5 million within the next 12 months primarily due to lapses of statutes of limitations and settlement of ongoing audits in various jurisdictions.