Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes:

The significant components of the Provision for income tax expense related to continuing operations are as follows (in millions):

	For the Year Ended December 31,
	2021		2020		2019
Current:
Federal	$	86.8	$	37.7	$	58.1
State and other	25.0		13.7		17.8
Total current expense	111.8		51.4		75.9
Deferred:
Federal	23.6		39.5		32.0
State and other	4.2		12.9		8.0
Total deferred expense	27.8		52.4		40.0
Total income tax expense related to continuing operations	$	139.6	$	103.8	$	115.9

A reconciliation of differences between the federal income tax at statutory rates and our actual income tax expense on our income from continuing operations, which include federal, state, and other income taxes, is presented below:

	For the Year Ended December 31,
	2021		2020		2019
Tax expense at statutory rate	21.0	%	21.0	%	21.0	%
Increase (decrease) in tax rate resulting from:
State and other income taxes, net of federal tax benefit	3.8	%	4.2	%	4.3	%
(Decrease) increase in valuation allowance	(0.5)	%	1.7	%	0.8	%
Government, class action, and related settlements	—	%	—	%	(1.2)	%
Noncontrolling interests	(3.3)	%	(3.7)	%	(3.0)	%
Share-based windfall tax benefits	(0.5)	%	(1.0)	%	(1.0)	%
Other, net	0.7	%	(0.2)	%	(0.3)	%
Income tax expense	21.2	%	22.0	%	20.6	%

The Provision for income tax expense in 2021 was greater than the federal statutory rate primarily due to: (1) state and other income tax expense offset by (2) the impact of noncontrolling interests, (3) share-based windfall tax benefits and (4) the decrease in valuation allowance. The Provision for income tax expense in 2020 was greater than the federal statutory rate primarily due to: (1) state and other income tax expense and (2) the increase in valuation allowance offset by (3) the impact of noncontrolling interests and (4) share-based windfall tax benefits. The Provision for income tax expense in 2019 was less than the federal statutory rate primarily due to: (1) the impact of noncontrolling interests, (2) government, class action, and related settlements, and (3) share-based windfall tax benefits offset by (4) state and other income tax expense. See Note 1, Summary of Significant Accounting Policies, “Income Taxes,” for a discussion of the allocation of income or loss related to pass-through entities, which is referred to as the impact of noncontrolling interests in this discussion.

In addition to the CARES Act provisions previously discussed in Note 1, Summary of Significant Accounting Policies, “Risks and Uncertainties,” the CARES Act also includes provisions relating to net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, technical corrections to tax depreciation methods for qualified improvement property and deferral of employer payroll taxes. The CARES Act did not materially impact our effective tax rate for the years ended December 31, 2020 and 2021, although it has impacted the timing of cash payments for taxes.

Deferred income taxes recognize the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes and the impact of available NOLs. The significant components of our deferred tax assets and liabilities are presented in the following table (in millions):

	As of December 31,
	2021		2020
Deferred income tax assets:
Net operating loss	$	50.4	$	57.6
Property, net	—		6.6
Insurance reserve	18.7		17.8
Stock-based compensation	15.2		15.2
Operating lease liabilities	18.2		22.1
Other accruals	35.1		43.4
Tax credits	10.9		10.5
Other	—		0.1
Total deferred income tax assets	148.5		173.3
Less: Valuation allowance	(43.1)		(46.2)
Net deferred income tax assets	105.4		127.1
Deferred income tax liabilities:
Revenue reserves	(0.7)		(5.7)
Intangibles	(102.9)		(99.7)
Operating lease right-of-use assets	(17.7)		(21.7)
Property, net	(3.4)		—
Carrying value of partnerships	(67.0)		(51.4)
Other	(0.4)		(0.4)
Total deferred income tax liabilities	(192.1)		(178.9)
Net deferred income tax liabilities	$	(86.7)	$	(51.8)

We have state NOLs of $50.4 million that expire in various amounts at varying times through 2031. For the years ended December 31, 2021 and 2020, the net (decrease) increase in our valuation allowance was $(3.1) million and $7.8 million, respectively. The decrease in our valuation allowance in 2021 related primarily to changes in forecasted income. The increase in our valuation allowance in 2020 related primarily to our expected ability to use related net operating losses prior to their expiration.

As of December 31, 2021, we have a remaining valuation allowance of $43.1 million. This valuation allowance remains recorded due to uncertainties regarding our ability to utilize a portion of our state NOLs and other credits before they expire. The amount of the valuation allowance has been determined for each tax jurisdiction based on the weight of all available evidence including management’s estimates of taxable income for each jurisdiction in which we operate over the periods in which the related deferred tax assets will be recoverable. It is possible we may be required to increase or decrease our valuation allowance at some future time if our forecast of future earnings varies from actual results on a consolidated basis or in the applicable state tax jurisdictions, if the timing of future tax deductions differs from our expectations, or pursuant to changes in state tax laws and rates.

Our continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. Interest recorded as part of our income tax provision during 2021, 2020, and 2019 was not material. Accrued interest income related to income taxes as of December 31, 2021 and 2020 was not material.

In December 2016, we signed an agreement with the IRS to participate in their Compliance Assurance Process (“CAP”) for the 2017 tax year and have renewed this agreement each year since. CAP is a program in which we and the IRS endeavor to agree on the treatment of significant tax positions prior to the filing of our federal income tax returns. The IRS is currently examining the 2020, 2021, and 2022 tax years. In September 2021, the IRS issued a no-change letter effectively closing our 2019 tax year audit. The statute of limitations has expired or we have settled federal income tax examinations with the IRS for all tax years through 2019. Our state income tax returns are also periodically examined by various regulatory taxing authorities. We are currently under audit by two states for tax years ranging from 2017 - 2019.

For the tax years that remain open under the applicable statutes of limitations, management considered potential unrecognized tax benefits and determined there are no material unrecognized tax benefits that would impact prior years’ income taxes.