Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We file a consolidated federal income tax return, consolidated unitary returns in certain states, other separate state income tax returns for certain of our subsidiary companies, and applicable foreign returns.

The provision for income taxes from continuing operations consisted of the following:

	For the years ended December 31,
(in thousands)	2023		2022		2021
Current:
Federal	$	34,205	$	56,236	$	52,145
State and local	8,010		11,411		9,096
Foreign	—		—		(48)
Total current income tax provision	42,215		67,647		61,193
Deferred:
Federal	(53,476)		2,882		6,616
State and local	(7,278)		10,770		3,087
Foreign	(1,188)		(738)		293
Total deferred income tax provision	(61,942)		12,914		9,996
Provision (benefit) for income taxes	$	(19,727)	$	80,561	$	71,189

The difference between the statutory rate for federal income tax and the effective income tax rate was as follows:

	For the years ended December 31,
	2023		2022		2021
Statutory rate	21.0	%	21.0	%	21.0	%
Effect of:
State and local income taxes, net of federal tax benefit	0.1		7.0		5.6
Non-deductible goodwill impairment	(18.6)		—		—
Non-deductible mark-to-market losses	—		—		11.5
Excess tax benefits from stock-based compensation	(0.2)		(0.3)		(0.9)
Non-deductible expenses	(0.1)		0.2		0.2
Reserve for uncertain tax positions	—		0.7		(0.8)
Other	(0.2)		0.5		1.5
Effective income tax rate	2.0	%	29.1	%	38.1	%

In 2023, a non-deductible expense of $855 million was recorded related to book impairment of goodwill. In 2021, a non-deductible expense of $103 million was recorded related to preferred stock issuance costs and unrealized losses on mark-to-market adjustments recorded on the common stock warrant issued in connection with the ION acquisition.

The approximate effect of the temporary differences giving rise to deferred income tax assets (liabilities) were as follows:

	As of December 31,
(in thousands)	2023		2022
Temporary differences:
Property and equipment	$	(39,414)	$	(46,710)
Goodwill and other intangible assets	(368,876)		(390,105)
Investments, primarily gains and losses not yet recognized for tax purposes	2,954		5,165
Accrued expenses not deductible until paid	9,869		7,897
Deferred compensation and retiree benefits not deductible until paid	31,662		32,174
Operating lease right-of-use assets	(32,034)		(36,843)
Operating lease liabilities	34,884		39,099
Interest limitation carryforward	38,290		6,375
Other temporary differences, net	10,999		7,305
Total temporary differences	(311,666)		(375,643)
Federal and state net operating loss carryforwards	16,283		20,283
Valuation allowance for state deferred tax assets	(11,997)		(15,097)
Net deferred tax liability	$	(307,380)	$	(370,457)

Total state operating loss carryforwards were $367 million at December 31, 2023. Our state tax loss carryforwards expire through 2042. Because we file separate state income tax returns for certain of our subsidiary companies, we are not able to use state tax losses of a subsidiary company to offset state taxable income of another subsidiary company.

The Company recognizes state net operating loss carryforwards as deferred tax assets, subject to valuation allowances. At each balance sheet date, we estimate the amount of carryforwards that are not expected to be used prior to expiration of the carryforward period. The tax effect of the carryforwards that are not expected to be used prior to their expiration is included in the valuation allowance.

The Company has not provided for income taxes, including withholding tax, U.S. state taxes, or tax on foreign exchange rate changes, associated with the undistributed earnings of our non-U.S. subsidiaries because we plan to indefinitely reinvest the unremitted earnings in these entities.

On December 27, 2020, the Consolidated Appropriations Act, 2021 was signed and enacted into law, which provided an additional stimulus package providing financial relief for individuals and small businesses. The Appropriations Act contains a variety of tax provisions, including full expensing of business meals, an expansion of the Paycheck Protection Program and expansion of the employee retention tax credit. We continue to evaluate the Appropriations Act, but do not currently expect it to have a material impact on our income tax provision.

In July and August 2022, the CHIPS and Science Act, (the “CHIPS Act”), and the Inflation Reduction Act of 2022, (the “IRA”), were signed into law. The IRA introduced a 15% corporate alternative minimum tax, or CAMT, on adjusted financial statement income for corporations with profits in excess of $1 billion, effective for tax years after December 31, 2022. Neither the CHIPS Act or CAMT provisions had a material impact on our 2023 effective tax rate. The IRA also includes a stock buyback excise tax of 1% on share repurchases, which will apply to net stock buybacks after December 31, 2022. We do not expect this to have a material impact if and when share repurchases are resumed.

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:

	For the years ended December 31,
(in thousands)	2023		2022		2021
Gross unrecognized tax benefits at beginning of year	$	12,124	$	10,572	$	2,376
Increases in tax positions for prior years	3,321		2,965		22,348
Decreases in tax positions for prior years	(2)		(390)		—
Increases in tax positions for current years	257		796		3,164
Decreases from lapse in statute of limitations	(670)		(173)		(4,234)
Decreases due to settlements with taxing authorities	—		(1,646)		(13,082)
Gross unrecognized tax benefits at end of year	$	15,030	$	12,124	$	10,572

The total amount of net unrecognized tax benefits that, if recognized, would affect the effective tax rate was $13.6 million at December 31, 2023. We accrue interest and penalties related to unrecognized tax benefits in our provision for income taxes. At December 31, 2023 and 2022, we had accrued interest related to unrecognized tax benefits of $1.6 million and $0.9 million, respectively, and penalties of $1.1 million and $1.2 million, respectively.

We file income tax returns in the U.S., Canada and in various state and local jurisdictions. We are routinely examined by tax authorities in these jurisdictions. At December 31, 2023, we are no longer subject to federal income tax examinations for years prior to 2018. For state and local jurisdictions, we are generally no longer subject to income tax examinations for years prior to 2019.

Due to the potential for resolution of federal and state examinations, and the expiration of various statutes of limitation, it is reasonably possible that our gross unrecognized tax benefits balance may change within the next twelve months by as much as $0.4 million.