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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse.
The components of income before taxes from continuing operations consisted of the following for the years ended December 31 (in thousands):
202320222021
Domestic$149,348 $112,635 $93,155 
Foreign(356)(1,145)6,407 
Income before taxes from continuing operations$148,992 $111,490 $99,562 
The provision for income taxes from continuing operations for the years ended December 31 consisted of the following (in thousands):
202320222021
Current:
U.S. Federal$21,579 $17,014 $16,137 
State6,048 5,647 5,009 
Foreign32 86 932 
Total current27,659 22,747 22,078 
Deferred:
U.S. Federal8,617 5,259 1,766 
State2,112 1,381 134 
Foreign71 (303)1,068 
Total deferred10,800 6,337 2,968 
Provision for income taxes$38,459 $29,084 $25,046 
The provision for income taxes from continuing operations differs from the federal statutory rate of 21% due to the following for the years ended December 31 (in thousands, except for percentages) :
 202320222021
Statutory rate$31,288 21.0 %$23,413 21.0 %$20,908 21.0 %
State taxes, less federal effect6,446 4.3 %5,541 5.0 %4,068 4.1 %
Federal tax credits(787)(0.5)%(549)(0.5)%(587)(0.6)%
Excess tax benefit on stock based compensation(203)(0.1)%(214)(0.2)%(2,039)(2.0)%
Executive compensation1,369 0.9 %960 0.9 %1,781 1.8 %
Other346 0.2 %(67)(0.1)%915 0.9 %
$38,459 25.8 %$29,084 26.1 %$25,046 25.2 %
Deferred tax liabilities at December 31 consisted of the following (in thousands):
20232022
Depreciation$13,838 $14,570 
Goodwill65,967 62,132 
Operating leases11,325 6,775 
Intangible assets1,919 3,706 
Other1,264 1,358 
Gross deferred tax liabilities94,313 88,541 
Capitalized research and development costs(6,286)(4,503)
Equity compensation(6,907)(5,993)
Operating leases(11,678)(7,076)
Assets held for sale— (13,669)
Capital loss carryforward(26,527)(26,490)
Other(12,422)(10,417)
Gross deferred tax assets(63,820)(68,148)
Valuation allowances26,593 26,488 
Deferred tax assets, net of valuation allowances(37,227)(41,660)
Net deferred tax liabilities$57,086 $46,881 
At December 31, 2023, the Company had total net operating loss carry forwards of $17.5 million, which included $0.3 million for federal, $16.5 million for state, and $0.7 million for foreign income tax purposes. The federal and state net operating loss carry forwards expire between 2024 and 2043. The foreign net operating loss carry forwards expire between 2024 and 2043. The Company recognized a total of $1.1 million of deferred tax assets, net of the federal tax benefit, related to these net operating losses prior to any valuation allowances, which included $0.1 million of federal and $0.8 million of state deferred tax assets and $0.2 million of foreign deferred tax assets.
As a result of the sale of the Industrial business during 2021, the Company generated a capital loss of $113.7 million for federal and state purposes to the extent allowable under state tax regulations. Amended Federal returns were filed to carry back $3.7 million of capital loss. As of December 31, 2023, the remaining capital loss carry forward is $110.0 million. The capital loss carryforward will expire in 2026. The Company recognized a total of $26.5 million of deferred tax assets, net of the federal benefit, related to this carryforward prior to any valuation allowances, which included $22.2 million of federal and $4.3 million of state deferred tax assets. The Company has a full valuation allowance on the capital loss carry forward and as a result there is no deferred tax asset related to the capital loss.
Deferred taxes include net deferred tax assets relating to certain state and foreign tax jurisdictions. A reduction of the carrying amount of deferred tax assets by a valuation allowance is required if it is more likely than not that such assets will not be realized.
The following sets forth a reconciliation of the beginning and ending amount of the Company’s valuation allowance (in thousands):
202320222021
Balance as of January 1$26,488 $26,581 $111 
Cost charged to the tax provision105 10 13 
Reductions— (103)(41)
Reclassification from discontinued operations upon sale of industrial group— — 26,498 
Balance as of December 31$26,593 $26,488 $26,581 
The Company made net payments for income taxes for the following amounts for the years ended December 31 (in thousands):
202320222021
Payments made for income taxes, net$23,447 $27,017 $22,076 
At December 31, 2023, the Company had approximately $1.4 million of undistributed earnings of foreign subsidiaries. The Company continues to maintain its assertion that all remaining foreign earnings will be indefinitely reinvested. Any excess earnings could be used to grow the Company's foreign operations through launches of new capital projects or additional acquisitions. Determination of the amount of unrecognized deferred U.S. income tax liability related to the Company's remaining unremitted foreign earnings is not practicable due to the complexities associated with its hypothetical calculation.
The Company did not have any unrecognized tax benefits or activity related to such benefits in any of the years presented in the consolidated financial statements. The Company classifies accrued interest and penalties related to unrecognized tax benefits in income tax expense. No interest or penalties have been recognized during the years presented.
The Company and its U.S. subsidiaries file a U.S. federal consolidated income tax return. Foreign and U.S. state jurisdictions have statute of limitations generally ranging from four to ten years. The Company is currently in appeals for an audit of tax years 2016 through 2019 in Massachusetts and believes the technical merits of the position will be sustained.