Note 12 - Federal and State Income Taxes

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

12. FEDERAL AND STATE INCOME TAXES

Under GAAP, deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and for income tax reporting purposes.

Significant components of the Company’s deferred tax liabilities and assets at December 31 are as follows:

	2021		2020
	(in thousands)
Deferred tax liabilities:
Property and equipment	$	84,081	$	100,736
Unrealized gains on securities		2,580		2,580
Prepaid expenses and other		2,783		2,599
Total deferred tax liabilities		89,444		105,915
Deferred tax assets:
Current expected credit losses		1,165		896
Tax credit carryforwards		-		988
Compensated absences		185		189
Self-insurance allowances		1,207		674
Marketable equity securities		-		2,129
Net operating loss carryover		-		32,031
Other		172		125
Total deferred tax assets		2,729		37,032
Net deferred tax liability	$	86,715	$	68,883

The reconciliation between the effective income tax rate and the statutory Federal income tax rate for the years ended December 31, 2021, 2020 and 2019 is presented in the following table:

	2021				2020				2019
	(in thousands)
	Amount		Percent		Amount		Percent		Amount			Percent
Federal income tax at statutory rate	$	21,526		21.0	$	4,916		21.0	$	2,124			21.0
Nondeductible per diem and meals		-		-		321		1.4		-			-
Other nondeductible expenses, net		-		-		-		-		342			3.4
State income taxes/other, net		4,463		4.4		345		1.5		(251	)		(2.5	)
Total income tax expense	$	25,989		25.4	$	5,582		23.9	$	2,215			21.9

The provision (benefit) for income taxes consisted of the following:

	2021		2020			2019
	(in thousands)
Current:
Federal	$	6,314	$	(62	)	$	(56	)
State		1,843		282			646
Total current income tax provision		8,157		220			590
Deferred:
Federal		13,720		4,860			2,177
State		4,112		502			(552	)
Total deferred income tax provision		17,832		5,362			1,625
Total income tax provision expense		25,989	$	5,582		$	2,215

In March 2020, the President of the United States signed the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), to stabilize the economy during the coronavirus pandemic. The CARES Act temporarily suspends and modifies certain tax laws established by the TCJA, including, but not limited to, modifications to net operating loss limitations, business interest limitations and alternative minimum tax. The CARES Act did not have a material impact on the Company’s prior year provision or the Company’s consolidated financial statements.

In determining whether a tax asset valuation allowance is necessary, management, in accordance with the provisions of ASC 740-10-30, weighs all available evidence, both positive and negative to determine whether, based on the weight of that evidence, a valuation allowance is necessary. If negative conditions exist which indicate a valuation allowance might be necessary, consideration is then given to what effect the future reversals of existing taxable temporary differences and the availability of tax strategies might have on future taxable income to determine the amount, if any, of the required valuation allowance. As of December 31, 2021 and 2020, management determined that the future reversals of existing taxable temporary differences and available tax strategies would generate sufficient future taxable income to realize its tax assets and therefore a valuation allowance was not necessary.

The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the position will be sustained on examination by taxing authorities, based on the technical merits of the position. As of December 31, 2021, an adjustment to the Company’s consolidated financial statements for uncertain tax positions has not been required as management believes that the Company’s tax positions taken in income tax returns filed or to be filed are supported by clear and unambiguous income tax laws. The Company recognizes interest and penalties related to uncertain income tax positions, if any, in income tax expense. During 2021 and 2020, the Company has not recognized or accrued any interest or penalties related to uncertain income tax positions.

The Company and its subsidiaries are subject to U.S. and Canadian federal income tax laws as well as the income tax laws of multiple state jurisdictions. The major tax jurisdictions in which the Company operates generally provide for a deficiency assessment statute of limitation period of three years, and as a result, the Company’s tax years 2018 and forward remain open to examination in those jurisdictions.