INCOME TAXES

3 Months Ended

Mar. 31, 2024

INCOME TAXES

INCOME TAXES

NOTE E – INCOME TAXES

The Company’s total effective tax benefit rate was 40.3% for the three months ended March 31, 2024, due primarily to the pre-tax loss from a noncash impairment charge to write off our equity investment in Phantom Auto included in the loss from continuing operations during the first quarter of 2024. The Company’s total effective tax rate of 24.1% for the three months ended March 31, 2023 includes discontinued operations further discussed in Note C. The effective tax benefit rate from continuing operations was 37.7% for the three months ended March 31, 2024. The effective tax rate from continuing operations was 20.0% for the three months ended March 31, 2023. State tax rates vary among states and average approximately 6.0%, although some state rates are higher, and a small number of states do not impose an income tax.

For the three months ended March 31 2024 and 2023, the difference between the Company’s effective tax rate from continuing operations and the federal statutory rate resulted from state income taxes, nondeductible expenses, changes in the cash surrender value of life insurance, the federal alternative fuel tax credit, the federal research and development tax credit, changes in tax valuation allowances, and the tax benefit from the vesting of stock awards.

As of March 31, 2024, the Company’s deferred tax liabilities, which will reverse in future years, exceeded the deferred tax assets. The Company evaluated the total deferred tax assets at March 31, 2024, and concluded that, other than for certain deferred tax assets related to foreign and state tax credit carryforwards and state net operating losses, the assets did not exceed the amount for which realization is more likely than not. In making this determination, the Company considered the future reversal of existing taxable temporary differences, future taxable income, and tax planning strategies. Valuation allowances for deferred tax assets totaled $1.8 million at both March 31, 2024 and December 31, 2023.

During the three months ended March 31, 2024, the Company paid federal, state, and foreign income taxes of $19.1 million and received refunds of less than $0.1 million of state income taxes that were paid in prior years. For the three months ended March 31, 2023, the Company paid federal, state, and foreign income taxes of $27.7 million and received refunds of $1.6 million of federal and state income taxes that were paid in prior years.

Income tax expense reflected in discontinued operations, which primarily consisted of federal and state income taxes on the gain on the sale of FleetNet, was $0.2 million and $18.0 million for the three months ended March 31, 2024 and 2023, respectively, or an effective tax rate of 25.5% in each period.