Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | INCOME TAXES The components of income tax expense for the years ended December 31 are as follows:
A reconciliation of expected income tax expense, computed by applying the statutory federal income tax rate in 2019, 2018, and 2017 to income before income taxes and the amounts reflected in the consolidated statements of operations is as follows:
The net amount recognized as a component of tax expense for tax credits, other tax benefits, and amortization from low-income housing tax credit (“LIHTC”) investments recognized per the table above was $0.3 million for the year ended December 31, 2019. The net amount recognized as a component of income tax expense per the table above was $0.1 million for the year ended December 31, 2018, and $0.3 million for the year ended December 31, 2017. As of December 31, 2019 and 2018, the carrying value of the investments related to low-income housing tax credits was $4.0 million and $1.4 million, respectively. No impairment losses have been recognized from forfeiture or ineligibility of tax credits or other circumstances during the life of any of the investments. As of December 31, 2019, the Company has future capital commitments of $0.7 million related to low-income housing tax credit investments. The capital commitments are expected to be called in 2020. A net deferred income tax asset of $14.4 million and $20.7 million is included in other assets in the consolidated balance sheets at December 31, 2019 and 2018, respectively. The tax effect of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities is as follows:
As part of the Trinity Capital Corporation acquisition in 2019, the company acquired net operating loss, tax credit, and capital loss deferred tax assets. Net operating losses originated in the years 2012, 2014, 2015, 2016, 2017, and 2019 and will expire in the years between 2032-2037. The 2019 net operating loss can be carried forward indefinitely. Tax credit carryforwards originated in years 2010-2015 and will expire in the years between 2030-3035. Capital losses originated in 2015, 2016, & 2018 and will expire in the years between 2020-2023. A valuation allowance is provided on deferred tax assets when it is more likely than not that some portion of the assets will not be realized. In 2019, as part of the Trinity Capital Corporation acquisition, the company acquired net operating loss, tax credit, and capital loss deferred tax assets. The company determined that it was more likely than not that some of the assets would not be realized. As such, the company recorded a $2.9 million valuation allowance as of December 31, 2019. The company did not record a valuation allowance for any federal or state deferred income tax assets as of December 31, 2018. The Company and its subsidiaries file income tax returns in the federal jurisdiction and in eleven states. The Company is no longer subject to federal, state or local income tax audits by tax authorities for years before 2016, with the exception of 2015 being an open year by one state taxing authority. Net operating losses generated prior to 2015 that are utilized going forward would still be subject to examination. As of December 31, 2019, the gross amount of unrecognized tax benefits was $1.5 million and the total amount of net unrecognized tax benefits that would impact the effective tax rate, if recognized, was $1.1 million. As of December 31, 2018 and 2017, the total amount of the net unrecognized tax benefits that would impact the effective tax rate, if recognized, was $0.9 million and $0.8 million, respectively. The Company believes it is reasonably possible that the gross amount of unrecognized benefits will be reduced by approximately $0.3 million as a result of a lapse of statute of limitations in the next 12 months. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense and classifies such interest and penalties in the liability for unrecognized tax benefits. The amounts accrued for interest and penalties as of December 31, 2019, 2018, and 2017 were not significant. The activity in the gross liability for unrecognized tax benefits was as follows:
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