Income Taxes

12 Months Ended

Apr. 30, 2020

INCOME TAXES

Income tax expense (benefit) attributable to earnings consisted of the following components:



	Years ended April 30,
	2020		2019		2018
Current tax expense (benefit):
Federal	$	22,182	$	10,326	(7,057	)
State	6,210		3,853		1,769
	28,392		14,179		(5,288	)
Deferred tax expense (benefit)	49,810		45,337		(98,178	)
Total income tax expense (benefit)	$	78,202	$	59,516	(103,466	)

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:



	As of April 30,
	2020			2019
Deferred tax assets:
Accrued liabilities and reserves	$	15,953		$	11,705
Property and equipment depreciation	27,512			24,661
Workers compensation	8,303			8,277
Deferred compensation	3,781			3,827
Equity compensation	7,083			6,727
State net operating losses & tax credits	424			775
Other	1,335			1,033
Total gross deferred tax assets	64,391			57,005
Less valuation allowance	47			47
Total net deferred tax assets	64,344			56,958
Deferred tax liabilities:
Property and equipment depreciation	(474,829		)	(420,710		)
Goodwill	(24,348		)	(21,560		)
Other	(765		)	(476		)
Total gross deferred tax liabilities	(499,942		)	(442,746		)
Net deferred tax liability	$	(435,598	)	(385,788		)

At April 30, 2020, the Company had net operating loss carryforwards for state income tax purposes of approximately $97,144, which are available to offset future state taxable income. The state net operating loss carryforwards begin to expire in 2021.

The valuation allowance for state net operating loss deferred tax assets as of April 30, 2020 and 2019 was $47. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected taxable income, and tax planning strategies in making this assessment.

Total reported tax expense applicable to the Company’s continuing operations varies from the tax that would have resulted from applying the statutory U.S. federal income tax rates to income before income taxes.



	Years ended April 30,
	2020		2019		2018
Income taxes at the statutory rates	21.0	%	21.0	%	30.4	%
Impact of Tax Reform Act	—	%	0.4	%	(80.5	)%
Federal tax credits	(1.9	)%	(2.3	)%	(2.2	)%
State income taxes, net of federal tax benefit	4.0	%	4.3	%	3.7	%
Impact of phased-in state law changes, net of federal benefit	(0.2	)%	(1.8	)%	0.8	%
ASU 2016-09 benefit (share based compensation)	(0.5	)%	(0.6	)%	(0.8	)%
Other	0.5	%	1.6	%	0.3	%
	22.9	%	22.6	%	(48.3	)%

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company had a total of $8,907 and $7,287 in gross unrecognized tax benefits at April 30, 2020 and 2019, respectively, which is recorded in other long-term liabilities in the consolidated balance sheets. Of this amount, $7,059 represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate. Unrecognized tax benefits increased $1,620 during the twelve months ended April 30, 2020, due primarily to the increase associated with income tax filing positions for the current year exceeding the decrease related to the expiration of certain statute of limitations.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



	2020			2019
Beginning balance	$	7,287		$	6,421
Additions based on tax positions related to current year	2,780			2,169
Reductions due to lapse of applicable statute of limitations	(1,160		)	(1,303		)
Ending balance	$	8,907		$	7,287

The total net amount of accrued interest and penalties for such unrecognized tax benefits was $354 and $242 at April 30, 2020 and 2019, respectively, and is included in other long-term liabilities. Net interest and penalties included in income tax expense for the twelve month periods ended April 30, 2020 and 2019 was an increase in tax expense of $112 and $51, respectively.

A number of years may elapse before an uncertain tax position is audited and ultimately settled. It is difficult to predict the ultimate outcome or the timing of resolution for uncertain tax positions. It is reasonably possible that the amount of unrecognized tax benefits could significantly increase or decrease within the next twelve months. These changes could result from the expiration of the statute of limitations, examinations or other unforeseen circumstances. The IRS is currently examining tax years 2016 and 2017. The Company has no other ongoing federal or state income tax examinations.

At this time, the Company’s best estimate of the reasonably possible change in the amount of the gross unrecognized tax benefits is a decrease of $1,800 during the next twelve months mainly due to the expiration of certain statutes of limitation. The federal statute of limitations remains open for the tax years 2012 and forward. Tax years 2012 and forward are subject to audit by state tax authorities depending on open statute of limitations waivers and the tax code of each state.