Note 15 - Income Taxes

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Income Tax Disclosure [Text Block]

15. Income Taxes:

The components of the Company’s provision (benefit) for income taxes from continuing operations were as follows:

	As of December 31,
(in thousands)	2022			2021			2020
Current:
Federal	$	27,865		$	36,592		$	321
International		102			85			103
State and local		5,691			7,739			59
		33,658			44,416			483
Deferred		(967	)		(668	)		(1,799	)
Income tax provision (benefit)	$	32,691		$	43,748		$	(1,316	)

The components of the Company’s deferred income taxes at December 31 are as follows:

(in thousands)	2022			2021
Deferred tax assets:
Inventory (excluding LIFO reserve)	$	2,176		$	2,198
Net operating loss and tax credit carryforwards		1,029			1,375
Allowance for credit losses		833			626
Accrued expenses		6,114			5,288
Lease liabilities		7,916			8,568
Interest rate hedge		-			665
Other		214			205
Deferred tax assets before valuation allowance		18,282			18,925
Valuation allowance		(919	)		(1,197	)
Total deferred tax assets		17,363			17,728
Deferred tax liabilities:
LIFO reserve		(3,451	)		(3,500	)
Property and equipment		(12,194	)		(12,293	)
Lease right of use assets		(7,769	)		(8,483	)
Interest rate hedge		(437	)		-
Intangibles		(3,537	)		(3,342	)
Total deferred tax liabilities		(27,388	)		(27,618	)
Deferred tax liabilities, net	$	(10,025	)	$	(9,890	)

The net deferred tax liability increased by $1.1 million related to the fixed interest rate hedge, which is recorded in “Other Comprehensive Income (Loss)” in the Consolidated Statements of Comprehensive Income (Loss).

The following table summarizes the activity related to the Company’s gross unrecognized tax benefits:

(in thousands)	2022			2021			2020
Balance as of January 1	$	228		$	28		$	28
Change in tax due to tax law		-			-			-
Increases related to current year tax positions		-			8			8
(Decrease) Increase related to prior year tax positions		(8	)		200			-
Decreases related to lapsing of statute of limitations		-			(8	)		(8	)
Balance as of December 31	$	220		$	228		$	28

It is expected that the amount of unrecognized tax benefits will not materially change in the next twelve months. The tax years 2019 through 2021 remain open to examination by major taxing jurisdictions to which the Company is subject.

The Company recognized interest related to uncertain tax positions in the income tax provision.

The following table reconciles the U.S. federal statutory rate to the Company’s effective tax rate:

	2022			2021			2020
U.S. federal statutory rate in effect		21.0	%		21.0	%		21.0	%
State and local taxes, net of federal benefit		4.5	%		4.5	%		1.0	%
Meals and entertainment		0.2	%		0.1	%		(1.8	%)
Tax credits		(0.1	%)		(0.1	%)		2.0	%
Stock based compensation		0.0	%		0.0	%		(3.4	%)
All other, net		0.8	%		1.0	%		0.2	%
Effective income tax rate		26.4	%		26.5	%		19.0	%

Income taxes paid in 2022, 2021 and 2020 totaled $33.4 million, $46.5 million and $1 thousand, respectively. Some subsidiaries of the Company’s consolidated group file state tax returns on a separate company basis and have state net operating loss carryforwards expiring over the next fifteen to 20 years. A valuation allowance is recorded to reduce certain deferred tax assets to the amount that is more likely than not to be realized. The valuation allowances recorded as of December 31, 2022 and 2021 were related to certain state net operating losses and totaled $0.9 million and $1.2 million, respectively.