INCOME TAXES

12 Months Ended

Dec. 31, 2023

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, 2023, 2022, and 2021 were as follows:

Table 10.1

	For the Year Ended December 31,
	2023		2022		2021
	(in thousands)
Current income tax expense	$	46,712	$	35,609	$	38,645
Deferred income tax expense	6,386		11,926		(2,273)
Income tax expense	$	53,098	$	47,535	$	36,372

A reconciliation of income tax at the statutory federal corporate income tax rate to the income tax expense for the years ended December 31, 2023, 2022, and 2021 is as follows:

Table 10.2

	For the Year Ended December 31,
	2023			2022			2021
	(dollars in thousands)
Tax expense at statutory rate	$	53,151		$	47,393		$	36,217
Excess tax benefits related to stock-based awards	(924)			(401)			(300)
Other	871			543			455
Income tax expense	$	53,098		$	47,535		$	36,372
Statutory tax rate	21.0		%	21.0		%	21.0		%

The components of the deferred tax assets and liabilities as of December 31, 2023 and 2022 were as follows:

Table 10.3

	As of December 31,
	2023		2022
	(in thousands)
Deferred tax assets:
Basis difference related to hedge items	$	84,922	$	53,360
Unrealized losses on available-for-sale securities	20,514		26,371
Allowance for losses	3,842		3,603
Compensation and Benefits	2,127		1,639
Stock-based compensation	2,481		1,755
Capital loss carryforwards	35		32
Valuation allowance	(35)		(32)
Other	2,051		1,444
Total deferred tax assets	$	115,937	$	88,172
Deferred tax liability:
Basis differences related to financial derivatives	$	80,887	$	49,526
Unrealized gains on cash flow hedges	9,843		12,855
Basis difference related to structured securitizations	16,647		7,782
Other	90		5
Total deferred tax liability	$	107,467	$	70,168
Net deferred tax asset	$	8,470	$	18,004

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 $35,000 and $32,000, as of December 31, 2023 and 2022, 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, 2023, no capital loss carryforwards expired. As of December 31, 2023, the amount of capital loss carryforwards was $0.2 million. These capital loss carryforwards will expire beginning in 2024.

As of December 31, 2023 and 2022, Farmer Mac did not identify any uncertain tax positions.

Farmer Mac did not have any unrecognized tax benefits for the years ended December 31, 2023, 2022, and 2021.

Tax years 2020 through 2023 remain subject to examination.