Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Farmer Mac is subject to federal corporate income taxes but is exempt from state and local corporate income taxes.  The components of the federal corporate income tax expense for the years ended December 31, 2021, 2020, and 2019 were as follows:

Table 10.1

	For the Year Ended December 31,
	2021		2020		2019
	(in thousands)
Current income tax expense	$	37,314	$	30,634	$	28,316
Deferred income tax expense	(1,961)		(1,849)		789
Income tax expense	$	35,353	$	28,785	$	29,105

A reconciliation of income tax at the statutory federal corporate income tax rate to the income tax expense for the years ended December 31, 2021, 2020, and 2019 is as follows:

Table 10.2

	For the Year Ended December 31,
	2021			2020			2019
	(dollars in thousands)
Tax expense at statutory rate	$	35,198		$	28,861		$	29,117
Excess tax benefits related to stock-based awards	(300)			(9)			(449)
Valuation allowance	—			—			49
Other	455			(67)			388
Income tax expense	$	35,353		$	28,785		$	29,105
Statutory tax rate	21.0		%	21.0		%	21.0		%

The components of the deferred tax assets and liabilities as of December 31, 2021 and 2020 were as follows:

Table 10.3

	As of December 31,
	2021		2020
	(in thousands)
Deferred tax assets:
Basis differences related to financial derivatives	$	63,982	$	100,099
Allowance for losses	3,452		3,690
Unrealized losses on cash flow hedges	1,427		6,065
Compensation and Benefits	1,281		1,020
Stock-based compensation	1,462		1,027
Capital loss carryforwards	32		86
Valuation allowance	(32)		(86)
Other	394		341
Total deferred tax assets	71,998		112,242
Deferred tax liability:
Basis differences related to hedged items	53,945		91,460
Unrealized gains on available-for-sale securities	2,451		2,364
Other	44		97
Total deferred tax liability	56,440		93,921
Net deferred tax asset	$	15,558	$	18,321

After the evaluation of both positive and negative objective evidence regarding the likelihood that its deferred tax assets will be realized, Farmer Mac established a valuation allowance of $32,000 and $86,000 as of December 31, 2021 and 2020, respectively, which was attributable to capital loss carryforwards on investment securities. Farmer Mac did not establish a valuation allowance for the remainder of its deferred tax assets because it believes it is more likely than not that those deferred tax assets will be realized. As of December 31, 2021, no capital loss carryforwards expired. As of December 31, 2021, the amount of capital loss carryforwards was $0.2 million. These capital loss carryforwards will expire beginning in 2024.

As of December 31, 2021 and 2020, Farmer Mac did not identify any uncertain tax positions.

Farmer Mac did not have any unrecognized tax benefits for the years ended December 31, 2021, 2020, and 2019.

Tax years 2018 through 2021 remain subject to examination.