Income Taxes

12 Months Ended

Dec. 31, 2020

Income tax expense is summarized as follows:


	Year Ended December 31,
(In thousands)	2020		2019		2018
Current
Federal	$	(31,838)	$	(29,584)	$	(95,191)
State	655		4,320		6,682
	(31,183)		(25,264)		(88,509)
Deferred
Federal	67,451		233,136		230,643
State	4,326		11,282		(1,040)
	71,777		244,418		229,603
Income tax expense	$	40,594	$	219,154	$	141,094

Income tax expense was different than the amounts computed by applying the statutory federal income tax rate as follows:


	Year Ended December 31,
	2020				2019				2018
(In thousands, except rates)	Amount		Rate		Amount		Rate		Amount		Rate
Computed "expected" federal income tax	$	50,636	21.00	%	$	189,047	21.00	%	$	146,609	21.00	%
State income tax, net of federal income tax benefit	4,486		1.86	%	14,773		1.64	%	11,850		1.70	%
Deferred tax adjustment related to change in overall state tax rate	1,213		0.50	%	(660)		(0.07)	%	(15,208)		(2.18)	%
Valuation allowance	(3,800)		(1.58)	%	17,676		1.96	%	8,975		1.29	%
Excess executive compensation	5,249		2.18	%	1,935		0.21	%	1,382		0.20	%
Reserve on uncertain tax positions	5,964		2.47	%	5		—	%	—		—	%
Tax credits generated	(23,216)		(9.63)	%	—		—	%	—		—	%


Tax Act	—		—	%	—		—	%	(11,367)		(1.63)	%
Other, net	62		0.04	%	(3,622)		(0.40)	%	(1,147)		(0.16)	%
Income tax expense	$	40,594	16.84	%	$	219,154	24.34	%	$	141,094	20.21	%

In 2020, the Company's overall effective tax rate decreased compared to 2019, primarily due to research and development tax credit benefits recorded in 2020 related to amended prior year returns. The overall effective tax rate increased in 2019 compared to 2018 primarily due to larger tax benefits recorded in 2018 related to the Tax Cuts and Jobs Act (the Tax Act) and changes in the overall state tax rate.

The composition of net deferred tax liabilities is as follows:


	December 31,
(In thousands)	2020		2019
Deferred Tax Assets
Net operating losses	$	22,177	$	22,360
Alternative minimum tax credits	—		22,120



Incentive compensation	16,427		17,776
Deferred compensation	5,753		5,463
Post-retirement benefits	7,482		7,847
Equity method investments	—		21,454
Capital loss carryforward	16,486		—
Leases	7,709		8,192
Other	3,267		1,336
Less: valuation allowance	(28,231)		(31,763)
Total	51,070		74,785
Deferred Tax Liabilities
Properties and equipment	809,919		768,692
Equity method investments	1,649		—
Leases	7,709		8,192
Derivative instruments	5,988		5
Total	825,265		776,889
Net deferred tax liabilities	$	774,195	$	702,104

As of December 31, 2020, the Company had gross state net operating loss carryforwards of $382.5 million, the majority of which expire between 2025 and 2040. Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in 2020, the Company fully utilized its remaining alternative minimum tax credits on its 2019 tax return. The Company also incurred a capital loss on the sale of equity method investments in 2020, and recorded a gross capital loss carryforward of $72.2 million, which can only be used to offset future capital gains, and will expire in 2025.

As of December 31, 2020, the Company had $13.1 million of valuation allowances on the deferred tax benefits related to state NOLs, and $14.9 million of valuation allowances on the deferred tax benefit related to the capital loss carryforward. The Company believes it is more likely than not that the remainder of its deferred tax benefits will be utilized prior to their expiration.

Unrecognized Tax Benefits

A reconciliation of unrecognized tax benefits is as follows:


	Year Ended December 31,
(In thousands)	2020		2019		2018
Balance at beginning of year	$	520	$	16,850	$	663
Additions for tax positions of current year	499		—		—
Additions for tax positions of prior years	5,465		—		16,187
Reductions for tax positions of prior years	—		(16,330)		—
Balance at end of year	$	6,484	$	520	$	16,850

During 2020, the Company recorded a $6.0 million reserve for unrecognized tax benefits related to research and development tax credits on prior year amended returns and current year estimates, and a $0.5 million liability for accrued interest associated with the uncertain tax position. As of December 31, 2020, the Company's overall net reserve for unrecognized tax positions was $6.5 million, with a $0.6 million liability for accrued interest on the uncertain tax positions. If recognized, the net tax benefit of $6.5 million would not have a material effect on the Company's effective tax rate.

The Company files income tax returns in the U.S. federal, various states and other jurisdictions. The Company is no longer subject to examinations by state authorities before 2012 or by federal authorities before 2017. The Company believes that appropriate provisions have been made for all jurisdictions and all open years, and that any assessment on these filings will not have a material impact on the Company's financial position, results of operations or cash flows.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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