| Income Taxes |
12. INCOME TAXES
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(In thousands) |
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2022 |
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2021 |
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2020 |
Income before income taxes: |
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U.S. |
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$ |
724,231 |
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$ |
429,731 |
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$ |
323,090 |
Foreign |
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17,904 |
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3,712 |
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- |
Total |
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$ |
742,135 |
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$ |
433,443 |
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$ |
323,090 |
Income tax expense (benefit): |
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Current: |
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U.S. Federal |
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$ |
136,013 |
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$ |
88,930 |
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$ |
66,792 |
State and local |
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39,978 |
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22,006 |
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|
13,345 |
Foreign |
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|
3,406 |
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|
1,039 |
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- |
Deferred: |
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U.S. Federal |
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7,016 |
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(4,123) |
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(8,087) |
State and local |
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(510) |
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1,769 |
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4,017 |
Foreign |
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|
243 |
|
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(194) |
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- |
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$ |
186,146 |
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$ |
109,427 |
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$ |
76,067 |
Deferred tax assets at December 31: |
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Receivables, net |
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$ |
5,114 |
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$ |
3,578 |
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Inventories, net |
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6,989 |
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5,961 |
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Other assets, principally share-based compensation |
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3,409 |
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4,219 |
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Accrued liabilities |
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18,980 |
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19,206 |
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Lease liability |
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13,212 |
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14,367 |
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Long-term liabilities |
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10,934 |
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9,821 |
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Long-term lease liability |
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35,451 |
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33,526 |
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Net operating loss carryforward |
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6,655 |
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7,747 |
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Disallowed interest carryforward |
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- |
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11,108 |
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100,744 |
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109,533 |
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Deferred tax liabilities at December 31: |
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Right of use assets |
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49,120 |
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48,300 |
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Property and equipment, net |
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46,031 |
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42,150 |
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Intangibles, net |
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254,101 |
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263,327 |
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Other |
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2,973 |
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2,094 |
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352,225 |
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355,871 |
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Net deferred tax liability at December 31 |
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$ |
251,481 |
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$ |
246,338 |
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A valuation allowance must be established for deferred tax assets when it is more-likely-than-not that they will not be realized. After review of all available positive and negative evidence, the Company has determined that no valuation allowance was required for the deferred tax assets as of December 31, 2022 or December 31, 2021.
At December 31, 2022, the net deferred tax liability is $251.5 million, all of which is reported as long-term deferred tax liabilities. At December 31, 2021, the net deferred tax liability of $246.3 million consisted of net long-term deferred tax assets of $1.9 million and net long-term deferred tax liabilities of $248.2 million. The deferred assets and deferred liabilities also include the state deferreds net of the federal benefit.
Of the deferred tax asset related to the net operating loss carryforward at December 31, 2022, $2.1 million will expire between 2023 and 2040. Of the deferred tax asset related to the net operating loss carryforward at December 31, 2021, $5.3 million will expire between 2022 and 2040.
A reconciliation of the U.S. Federal statutory tax rate to the income tax expense (benefit) on income was as follows:
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2022 |
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2021 |
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2020 |
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U.S. Federal statutory tax rate |
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21.0 |
% |
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21.0 |
% |
|
21.0 |
% |
State and local taxes, net of U.S. Federal tax benefit |
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4.2 |
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4.3 |
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4.2 |
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Share based compensation |
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(0.2) |
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(0.5) |
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(2.1) |
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Non-deductible/non-taxable items (1) |
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0.1 |
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0.1 |
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0.2 |
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Effect of rates different than statutory |
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0.1 |
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— |
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— |
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Other, net (1) |
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(0.1) |
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0.3 |
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0.2 |
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Effective tax rate |
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25.1 |
% |
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25.2 |
% |
|
23.5 |
% |
(1) Certain prior year amounts have been reclassified to conform to current year presentation |
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A tax benefit of $1.7 million, $2.4 million and $7.8 million related to share-based compensation was recognized in income tax expense for the years ended December 31, 2022, 2021 and 2020, respectively.
We file income tax returns in the U.S. Federal jurisdiction, various U.S. state and local jurisdictions, and foreign jurisdictions. With few exceptions, we are no longer subject to income tax examinations on filed returns for years before 2017.
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