Income Taxes

12 Months Ended

Dec. 31, 2019



7.	Income Taxes

Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the net deferred tax assets as reflected on the Consolidated Balance Sheets are as follows:



	December 31,
(in thousands)	2019			2018

Deferred tax liabilities
Prepaid assets	$	(4,252	)	$	(3,306	)
Depreciation	(4,564		)	(3,918		)
Software development costs	(6,475		)	(4,950		)
Tenant improvements	(3,209		)	—
Right-of-use leased assets	(15,949		)	—
Intangibles	(955		)	(474		)
Total deferred tax liabilities	(35,404		)	(12,648		)

Deferred tax assets
Accrued incentive compensation	5,946			8,612
Net operating loss carryforward	632			709
Workers’ compensation accruals	5,404			4,739
Accrued rent	1,223			918
Stock-based compensation	6,712			6,183
Operating lease liabilities	19,158			—
Minority investment impairment	673			676
Other	287			305
Total deferred tax assets	40,035			22,142
Valuation allowance	(675		)	(678		)
Total net deferred tax assets	39,360			21,464

Net deferred tax assets	$	3,956		$	8,816

The components of income tax expense are as follows:



	Year Ended December 31,
(in thousands)	2019		2018			2017

Current income tax expense
Federal	$	27,385	$	40,347		$	30,009
State	6,299		11,133			5,988
Total current income tax expense	33,684		51,480			35,997

Deferred income tax (benefit) expense
Federal	4,016		(3,398		)	9,549
State	844		(1,135		)	193
Total deferred income tax (benefit) expense	4,860		(4,533		)	9,742
Total income tax expense	$	38,544	$	46,947		$	45,739

In 2016, we prospectively adopted ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. We recognized an income tax benefit of $14.6 million in 2019, $3.9 million in 2018 and $6.8 million in 2017 related to excess tax benefits from the vesting of long-term incentive awards and restricted stock awards.

The reconciliation of income tax expense computed at U.S. federal statutory tax rates to the reported income tax expense from continuing operations is as follows:



	Year Ended December 31,
(in thousands)	2019			2018			2017

Expected income tax expense at 21%, 21% and 35%, respectively	$	39,825		$	38,296		$	45,549
State income taxes, net of federal benefit	5,821			7,660			4,085
Nondeductible expenses	5,959			4,831			2,649
Section 199 benefits	—			—			(875		)
Equity compensation	(12,120		)	(2,737		)	(6,218		)
Research and development credit	(1,069		)	(856		)	(634		)
Disaster employee retention credit	—			—			(669		)
Enactment of the 2017 Tax Reform Act	—			—			2,559
Other, net	128			(247		)	(707		)
Reported total income tax expense	$	38,544		$	46,947		$	45,739

At December 31, 2019, we have net operating loss carryforwards totaling $2.5 million that expire from 2023 to 2030 related to an acquisition that occurred in 2010.

We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2019, 2018 and 2017, we made no provisions for interest or penalties related to uncertain tax positions. The tax years 2016 through 2018 remain open to examination by the Internal Revenue Service of the United States. The tax years 2015 through 2018 remain open to examination by various state tax authorities.