Note 6 - Income Taxes

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Income Tax Disclosure [Text Block]

6. Income Taxes

Income tax expense attributable to earnings before income taxes consists of (in thousands):

	Years ended December 31,
	2022		2021		2020
Current:
Federal	$	85,855	$	142,542	$	138,952
State and local		51,078		43,004		28,094
		136,933		185,546		167,046
Deferred:
Federal		172,334		43,900		(2,392	)
State and local		2,755		9,520		(4,664	)
		175,089		53,420		(7,056	)
Total tax expense/(benefit)	$	312,022	$	238,966	$	159,990

Income tax expense attributable to earnings before income taxes differed from the amounts computed using the statutory federal income tax rate of 21% as follows (in thousands):

	Years ended December 31,
	2022			2021			2020
Income tax at federal statutory rate	$	269,088		$	209,952		$	139,865
State tax, net of federal effect		41,624			37,223			20,071
Benefit of stock compensation		(7,584	)		(7,583	)		(3,503	)
199/R&D credit		5,839			(1,524	)		-
Nondeductible meals and entertainment		294			130			1,344
Change in effective state tax rate, net of federal benefit		1,561			(724	)		98
Other, net		1,200			1,492			2,115
Total tax expense	$	312,022		$	238,966		$	159,990

Income taxes receivable was $102.7 million and $33.7 million at December 31, 2022 and 2021, respectively. These amounts have been included in other receivables in our Consolidated Balance Sheets. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2022 and 2021, are presented below (in thousands):

	December 31,
	2022			2021
Deferred tax assets:
Insurance accruals	$	54,047		$	27,487
Allowance for doubtful accounts		10,230			8,886
Compensation accrual		30,492			22,061
CARES Act payroll tax deferral		-			9,955
Deferred compensation accrual		28,249			28,937
Federal benefit of state uncertain tax positions		16,280			12,870
Lease liabilities		71,732			43,850
State NOL carry-forward		6,765			7,303
Other		7,361			5,549
Total gross deferred tax assets		225,156			166,898
Valuation allowance		(6,765	)		(7,303	)
Total deferred tax assets, net of valuation allowance		218,391			159,595
Deferred tax liabilities:
Plant and equipment, principally due to differences in depreciation		1,011,963			816,744
Prepaid permits and insurance, principally due to expensing for income tax purposes		55,132			44,132
Lease right-of-use assets		71,827			44,161
Total gross deferred tax liabilities		1,138,922			905,037
Net deferred tax liability	$	920,531		$	745,442

Guidance on accounting for uncertainty in income taxes prescribes recognition and measurement criteria and requires that we assess whether the benefits of our tax positions taken are more likely than not of being sustained under tax audits.  We have made adjustments to the balance of unrecognized tax benefits, a component of other long-term liabilities on our Consolidated Balance Sheets, as follows (in millions):

	December 31,
	2022			2021			2020
Beginning balance	$	78.5		$	66.1		$	50.6
Additions based on tax positions related to the current year		25.8			14.9			9.8
Additions/(reductions) based on tax positions taken in prior years		2.8			4.8			13.9
Reductions due to settlements		(8.0	)		(0.9	)		(1.0	)
Reductions due to lapse of applicable statute of limitations		(10.0	)		(6.4	)		(7.2	)
Ending balance	$	89.1		$	78.5		$	66.1

At December 31, 2022 and 2021, we had a total of $89.1 million and $78.5 million, respectively, in gross unrecognized tax benefits.  Of these amounts, $72.6 million and $67.2 million represent the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate in 2022 and 2021, respectively.  Interest and penalties related to income taxes are classified as interest expense in our Consolidated Statements of Earnings.  The amount of accrued interest and penalties recognized during the years ended December 31, 2022, 2021, and 2020, was $4.3 million, $3.5 million, and $2.9 million, respectively. Future changes to unrecognized tax benefits will be recognized as income tax expense and interest expense, as appropriate.  The total amount of accrued interest and penalties for such unrecognized tax benefits at December 31, 2022 and 2021, was $7.9 million and $6.4 million, respectively. No material change in unrecognized tax benefits is expected in the next 12 months.

Tax years 2019 and forward remain subject to examination by federal tax jurisdictions, while tax years 2012 and forward remain open for state jurisdictions.