Income Taxes

12 Months Ended

Dec. 31, 2019

Note 13— Income Taxes

The following table summarizes the provision for income taxes:


	Year Ended December 31,
	2019		2018		2017
	(in thousands)
Current:
Federal	$	15,041	$	23,407	$	35,673
State	6,158		5,992		7,179
	$	21,199	$	29,399	$	42,852
Deferred:
Federal	$	(824)	$	(9,526)	$	2,924
State	140		(3,487)		(1,037)
	$	(684)	$	(13,013)	$	1,887

Tax provision	$	20,515	$	16,386	$	44,739

Deferred income taxes are recorded using the asset and liability method. Deferred tax assets and liabilities are determined based on differences between the financial reporting and income tax basis of assets and liabilities.

On December 22, 2017, the Tax Cuts and Jobs Act was signed into law, enacting significant changes to corporate tax rates, as well as business-related exclusions, deductions and credits. The primary impact to the Company was the decrease in the U.S. federal corporate income tax rate from 35% to 21%. Accordingly, during the fourth quarter 2017, the Company recognized the effects of the changes in the tax law and rates on its deferred tax balances. The net result of the remeasurement was an approximately $4.5 million decrease to the Company’s net deferred tax assets balance and a corresponding increase to the Company’s provision for income taxes for the year ended December 31, 2017.

Significant components of the Company’s federal and state deferred tax asset and liability balances were as follows:


	Year Ended December 31,
	2019		2018
	(in thousands)
Deferred tax assets:
Allowance for doubtful accounts	$	13,376	$	14,599
Deferred compensation	8,074		7,350
Accrued insurance claims	4,902		3,715
Non-deductible reserves	489		336
Amortization of intangibles	—		24
Other	1,641		1,730
	$	28,482	$	27,754
Deferred tax liabilities:
Expensing of housekeeping supplies	$	(3,796)	$	(4,375)
Amortization of intangibles	(218)		—
Depreciation of property and equipment	(1,969)		(1,913)
Leases	(96)		—
Other	(2,039)		(914)
	$	(8,118)	$	(7,202)

Net deferred tax assets	$	20,364	$	20,552

Realization of the Company’s deferred tax assets is dependent upon future earnings in specific tax jurisdictions, the timing and amount of which are uncertain. Management assesses the Company’s income tax positions and records tax benefits for all years subject to examination based upon an evaluation of the facts, circumstances, and information available at the reporting dates, which include historical operating results and expectations of future earnings. As such, management believes it is more likely than not that the deferred tax assets recorded will be realized to reduce future income taxes and therefore no valuation allowances are necessary.

The table below provides a reconciliation between the tax expense computed by applying the statutory federal income tax rate to income before income taxes and the provision for income taxes:


	Year Ended December 31,
	2019		2018		2017
	(in thousands)
Income tax expense computed at statutory rate	$	17,872	$	20,981	$	46,538
Increases (decreases) resulting from:
State income taxes, net of federal tax benefit	4,902		1,936		3,661
Federal jobs credits	(3,164)		(5,006)		(4,193)
Tax exempt interest	(399)		(384)		(568)
Stock-based compensation	298		(1,179)		(4,632)
United States Tax Reform - remeasurement of deferred taxes	—		—		3,719
Other, net	1,006		38		214
Income tax expense	$	20,515	$	16,386	$	44,739

The Company performs an evaluation each period of its tax positions taken and expected to be taken in tax returns. The evaluation is performed on positions relating to tax years that remain subject to examination by major tax jurisdictions, the earliest of which is the tax year ended December 31, 2014. Based on the evaluation, the Company concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. Therefore, the table reporting on the change in the liability for unrecognized tax benefits during the years ended December 31, 2019 and 2018 is omitted as there is no activity to report in such account for the years ended December 31, 2019 or 2018.