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INCOME TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
  

For the years ended December 31, 2023, 2022 and 2021, we have the following income (loss) before income taxes (in thousands):
 December 31,
 202320222021
US Domestic$60,374 $59,529 $58,806 
Foreign(21,564)(16,560)73 
Income (loss) before income taxes$38,810 $42,969 $58,879 

For the years ended December 31, 2023, 2022 and 2021, we recognized income tax expense comprised of the following (in thousands):
 
 December 31,
 202320222021
Federal current tax$— $— $— 
State current tax3,442 371 (2,191)
Foreign current tax638 87 18 
Other current tax— — — 
Federal deferred tax8,960 6,470 9,831 
State deferred tax(2,724)5,863 6,902 
Foreign deferred tax(1,843)(3,430)— 
Currency translation— — — 
Income tax expense8,473 9,361 14,560 
 
A reconciliation of the statutory U.S. federal rate and effective rates is as follows:
 Years Ended December 31,
 202320222021
Federal tax$8,150 $9,023 $12,365 
State franchise tax, net of federal benefit3,730 595 4,198 
Other Non deductible expenses196 305 (93)
Officer Compensation1,199 759 291 
Noncontrolling interests in partnerships(5,752)(4,821)(4,114)
Changes in valuation allowance(2,569)6,124 (249)
Return to provision5,987 234 (2,530)
Deferred true-ups and other483 (1,451)5,009 
Foreign rate differential(1,083)(737)4 
Uncertain tax provisions(884)(749)(321)
Tax rate adjustment(984)— — 
Other differences— 79 — 
Income tax expense$8,473 $9,361 $14,560 

Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial and income tax reporting purposes and operating loss carryforwards.
 
Our deferred tax assets and liabilities comprise the following (in thousands):
 December 31,
Deferred tax assets:20232022
Net operating losses$43,247 $68,124 
Accrued expenses4,432 3,941 
Operating lease liability136,097 142,347 
Equity compensation4,179 4,387 
Allowance for doubtful accounts2,198 3,071 
Other15,755 6,541 
Valuation allowance(9,688)(12,095)
Total Deferred Tax Assets$196,220 $216,316 
Deferred tax liabilities:
Property and equipment(7,851)(9,214)
Goodwill(42,419)(38,820)
Intangibles(15,578)(18,640)
Operating lease right-of-use asset(122,840)(129,802)
Outside basis difference(18,547)(20,015)
Other(4,761)(9,081)
Total Deferred Tax Liabilities$(211,996)$(225,572)
Net Deferred Tax Liability$(15,776)$(9,256)

 
As of December 31, 2023, we had federal net operating loss carryforwards of approximately $128.9 million, which is comprised of definite and indefinite net operating losses. We had federal net operating loss carryforwards of approximately $63.9 million, which expire at various intervals from the years 2026 to 2037, and had carryforwards of $65.0 million of net operating losses which do not expire. Federal net operating losses generated in tax years following December 31, 2017 carryover indefinitely and may be used to offset up to 80% of future taxable net income. We also had state net operating loss carryforwards of approximately $145.3 million, which expire at various intervals from the years 2024 through 2042. As of December 31, 2023, $24.9 million of our federal net operating loss carryforwards acquired in connection with the 2011 acquisition of Raven Holdings U.S., Inc. and the 2019 acquisition of Nulogix Health, Inc. are subject to limitations related to their utilization under Section 382 of the Internal Revenue Code. We also had foreign net operating loss carryforwards of approximately $45.8 million, which do not expire and are carried over indefinitely.
   
We considered all evidence available when determining whether deferred tax assets are more likely-than-not to be realized, including projected future taxable income, scheduled reversals of deferred tax liabilities, prudent tax planning strategies, and recent financial operations. The evaluation of this evidence requires significant judgment about the forecasts of future taxable income, based on the plans and estimates we are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income. As of December 31, 2023, we have determined that deferred tax assets of $196.2 million are more likely-than-not to be realized. We have also determined deferred tax liabilities of $42.4 million are related to book basis in goodwill that has an indefinite life.
 
We file consolidated income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. We continue to reinvest earnings of the non-US entities for the foreseeable future and therefore have not recognized any U.S. tax expense on these earnings. With limited exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2018. We do not anticipate the results of any open examinations would result in a material change to our financial position.
  
A reconciliation of the total gross amounts of unrecognized tax benefits for the years ended are as follows (in thousands):
 December 31,
 202320222021
Balance at beginning of year$4,144 $5,088 $5,484 
Increases related to prior year tax positions54 55 317 
Increases related to current year tax positions62 — — 
Expiration of the statute of limitations for the assessment of taxes(1,180)(999)(713)
Increase related to change in rate2 — — 
Balance at end of year$3,082 $4,144 $5,088 

At December 31, 2023, we had unrecognized tax benefits of $3.1 million of which $2.5 million will affect the effective tax rate if recognized.
 
We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. During the year ended December 31, 2023 the Company accrued approximately $47 thousand of interest and penalties. As of December 31, 2023, accrued interest and penalties amounted to approximately $0.4 million. We do not anticipate the uncertain tax position to change materially within the next 12 months.

In 2021, the Organization for Economic Co-operation and Development ("OECD") announced an inclusive framework on base erosion and profit shifting including Pillar Two Model Rules defining the global minimum tax, which calls for taxation of large multinational corporations at a minimum rate of 15%. Subsequently multiple sets of administrative guidance have been issued. Many non-US tax jurisdictions have either recently enacted legislation to adopt certain components of Pillar Two Model Rules beginning in 2024 (including the European Union Member States) with the adoption of additional components in later years or announced their plans to enact legislation in future years. We are continuing to evaluate the impacts of enacted legislation and pending legislation to enact Pillar Two Model Rules in the jurisdictions that we operate in outside of the US.

The Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act of 2022 was signed into law on August 9, 2022 to boost domestic semiconductor manufacturing and encourage US research activities. The act provided a 25% investment credit intended to promote domestic production of semiconductors. This act is not expected to have a material impact for us.