Income Taxes (Notes)

12 Months Ended

Dec. 31, 2021

Income Taxes [Abstract]

Income Taxes [Text Block]

Income Taxes

For financial statement purposes, earnings before income taxes by source was comprised of the following:

	Year Ended December 31,
(In thousands)	2021		2020		2019
Domestic	$	176,042	$	212,859	$	212,406
Foreign	18,262		9,920		11,377
Earnings before income taxes	$	194,304	$	222,779	$	223,783

A reconciliation of the federal statutory rate of 21% to the effective rate follows:

	Year Ended December 31,
	2021		2020		2019
Tax at statutory rate	21.0	%	21.0	%	21.0	%
Stock compensation	11.6	%	—	%	—	%
State income taxes	7.4	%	2.8	%	4.3	%
Effect of foreign operations	2.0	%	(0.3)	%	0.3	%
Effect of current and prior year credits	(2.4)	%	(0.8)	%	(2.7)	%
Change in unrecognized tax benefits	(2.8)	%	0.3	%	—	%
Other permanent differences	0.3	%	(0.7)	%	0.2	%
Prior year return to provision adjustments	(0.2)	%	1.1	%	(2.7)	%
Benefit of CARES Act	—	%	(7.5)	%	—	%
Valuation allowance	(7.1)	%	(9.3)	%	1.2	%
Other, net	0.8	%	—	%	0.8	%
Effective income tax rate	30.6	%	6.6	%	22.4	%

The components of income tax expense (benefit) are as follows:

	Year Ended December 31,
(In thousands)	2021		2020		2019
Current expense (benefit)
Federal	$	(7,398)	$	14,354	$	(6,996)
State	15,106		4,735		528
Foreign	3,690		1,608		796
Total current	11,398		20,697		(5,672)
Deferred expense (benefit)
Federal	56,716		12,576		37,309
State	(1,205)		(2,956)		16,439
Foreign	(7,545)		(15,653)		2,161
Total deferred	47,966		(6,033)		55,909
Total income tax expense (benefit)	$	59,364	$	14,664	$	50,237

Deferred tax assets (liabilities) consist of the following:

	December 31,
(In thousands)	2021		2020
Deferred tax assets
Net operating loss carryforwards	$	35,834	$	32,834
Accrued liabilities	48,659		45,776
Intangible assets	165,135		9,676
Lease obligations	73,819		67,999
Other assets including credits	12,157		10,079
Foreign tax credit carryforwards	7,696		5,643
Total deferred tax assets	343,300		172,007
Valuation allowance	(7,688)		(21,645)
Deferred tax assets, net	335,612		150,362
Deferred tax liabilities
Rental merchandise	(288,504)		(206,833)
Property assets	(20,094)		(18,935)
Lease assets	(72,458)		(66,661)
Other liabilities	(108)		(561)
Total deferred tax liabilities	(381,164)		(292,990)
Net deferred taxes	$	(45,552)	$	(142,628)

At December 31, 2021, we had net operating loss carryforwards of approximately $239 million for state, $37 million for federal and $52 million for foreign jurisdictions. State net operating losses were partially offset by a valuation allowance. We also had federal, state and foreign tax credit carryforwards of approximately $15.6 million of which a portion has been offset by a valuation allowance. The net operating losses and credits will expire in various years between 2022 and 2041.

We file income tax returns in the U.S. and multiple foreign jurisdictions with varying statutes of limitations. In the normal course of business, we are subject to examination by various taxing authorities. We are currently under examination by certain Federal and state revenue authorities for the fiscal years 2012 through 2019. The following is a summary of all tax years that are open to examination.

•U.S. Federal - 2013 and forward

•U.S. States - 2011 and forward

•Foreign - 2013 and forward

We do not anticipate that adjustments as a result of these audits, if any, will have a material impact to our Consolidated Statement of Operations, Consolidated Balance Sheets, and statement of cash flows or earnings per share.

As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred tax assets. After review of the positive evidence generated during the year, we have determined no valuation allowance is required against Mexico net operating losses. A valuation allowance is still required related to certain tax credits and certain state net operating losses.

A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:

	Year Ended December 31,
(In thousands)	2021		2020		2019
Beginning unrecognized tax benefit balance	$	22,184	$	24,208	$	36,364
Additions (Reductions) based on tax positions related to current year	461		1,204		(654)
Additions for tax positions of prior years	4,119		45		415
Reductions for tax positions of prior years	(3,006)		(2,086)		(11,917)
Settlements	(17,222)		(1,187)		—
Ending unrecognized tax benefit balance	$	6,536	$	22,184	$	24,208

Included in the balance of unrecognized tax benefits at December 31, 2021, is $2.2 million, net of federal benefit, which, if ultimately recognized, will affect our annual effective tax rate.

During the year ended December 31, 2021, we recorded $2.6 million of interest income primarily related to the reversal of the accrual of interest for matters settled during the year in our favor, partially offset by interest expense of $1.2 million for remaining uncertain tax positions, both of which are excluded from the reconciliation of unrecognized tax benefits presented above.

The effect of the tax rate change for items originally recognized in other comprehensive income was properly recorded in tax expense from continuing operations. This results in stranded tax effects in accumulated other comprehensive income at December 31, 2021. Companies can make a policy election to reclassify from accumulated other comprehensive income to retained earnings the stranded tax effects directly arising from the change in the federal corporate tax rate. We did not exercise the option to reclassify stranded tax effects within accumulated other comprehensive income in each period in which the effect of the change in the U.S. federal corporate income tax rate resulting from the Tax Cuts and Jobs Act of 2017 was recorded.