Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Income Taxes

The Company records income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and attributable to operating loss and tax credit carryforwards, if any. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which the temporary differences are expected to be recovered or paid.

In accordance with ASC 740, we evaluate our deferred tax assets, including the benefit from NOLs and tax credit carryforwards, if any, to determine if a valuation allowance is required. Companies must assess, using significant judgments, whether a valuation allowance should be established based on the consideration of all available evidence using a “more likely than not” standard with significant weight being given to evidence that can be objectively verified. This assessment gives appropriate consideration to all positive and negative evidence related to the realization of the deferred tax assets and considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the length of statutory carryforward periods, our experience with operating losses and our experience of utilizing tax credit carryforwards and tax planning alternatives. Based upon a review of all available evidence, we believe our deferred tax assets were fully realizable in all periods presented.

At December 31, 2021, the Company’s total deferred tax assets were $30.3 million which is offset by $20.1 million of total deferred tax liabilities for a $10.3 million net deferred tax asset which is reported on the Company’s Consolidated Balance Sheets.

The tax effects of the significant temporary differences that comprise the deferred tax assets and liabilities are as follows:

	December 31,
(In thousands)	2021		2020
Deferred tax assets:
Warranty, insurance and other accruals	$	9,764	$	8,931
Equity-based compensation	1,430		1,537
Inventory	5,033		5,344
Operating lease liabilities	12,900		13,145
State taxes	335		273
Net operating loss carryforward	65		65
Deferred charges	809		—
Total deferred tax assets	$	30,336	$	29,295
Deferred tax liabilities:
Federal effect of state deferred taxes	$	373	$	230
Depreciation	6,139		7,794
Operating lease right-of-use assets	12,763		13,099
Prepaid expenses	810		1,304
Deferred charges	—		685
Total deferred tax liabilities	$	20,085	$	23,112
Net deferred tax asset	$	10,251	$	6,183

The provision from income taxes consists of the following:

	Year Ended December 31,
(In thousands)	2021		2020		2019
Current:
Federal	$	93,869	$	54,634	$	29,602
State	22,445		12,087		4,985
	$	116,314	$	66,721	$	34,587
	Year Ended December 31,
(In thousands)	2021		2020		2019
Deferred:
Federal	$	(3,530)	$	2,520	$	1,490
State	(538)		928		2,361
	$	(4,068)	$	3,448	$	3,851
Total	$	112,246	$	70,169	$	38,438

For 2021, 2020 and 2019, the Company’s effective tax rate was 22.05%, 22.63%, and 23.15%, respectively. The decrease in 2021’s effective tax rate from 2020 and 2020’s effective tax rate from 2019 was primarily attributable to an increased tax benefit from energy tax credits. Reconciliation of the differences between income taxes computed at the federal statutory tax rate and consolidated benefit from income taxes are as follows:

	Year Ended December 31,
(In thousands)	2021		2020		2019
Federal taxes at statutory rate	$	106,914	$	65,109	$	34,865
State and local taxes – net of federal tax benefit	17,941		10,761		5,981
Equity Compensation	(2,334)		(1,322)		(1,251)
Federal tax credits	(12,676)		(7,182)		(3,493)
Other	2,401		2,803		2,336
Total	$	112,246	$	70,169	$	38,438

The Company files income tax returns in the U.S. federal jurisdiction, and various states.  The Company is no longer subject to U.S. federal, state or local examinations by tax authorities for years before 2015.  The Company is audited from time to time, and if any adjustments are made, they would be either immaterial or reserved.

The Company recognizes interest and penalties accrued related to unrecognized tax benefits in tax expense.  At December 31, 2021, 2020 and 2019, we had no unrecognized tax benefits due to the lapse of the statute of limitations and completion of audits in prior years. We believe that our current income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change.

The Company had $0.1 million of state NOL carryforwards, net of the federal benefit, at December 31, 2021. Our state NOLs may be carried forward from one to 15 years, depending on the tax jurisdiction, with $0.1 million expiring between 2028 and 2032, absent sufficient state taxable income.