Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income tax expense for the Company years ended December 31, 2022 and 2021, consisted of the following (dollars in thousands):

	Year Ended December 31, 2022		Year Ended December 31, 2021
Current income tax expense
Federal	$	(444)	$	650
State and local	2,777		909
Total current income tax expense	$	2,333	$	1,559
Deferred income tax expense
Federal	$	711	$	959
State and local	326		464
Total deferred tax expense	1,037		1,423
Total income tax expense	$	3,370	$	2,982

Total income tax expense differed from the amount computed by applying the federal statutory tax rate of 21.0% for the years ended December 31, 2022 and 2021, as a result of the following (dollars in thousands):

	Year Ended December 31, 2022		Year Ended December 31, 2021
Computed income tax expense at federal statutory rate on pre-tax income	$	4,117	$	4,255
State income tax expense, net of federal tax expense	1,542		1,006
Bankruptcy costs	153		62
Section 162(m) disallowance	1,510		1,537
Loan forgiveness	—		(4,200)
Provision to return	22		(100)
Uncertain tax positions	(5,397)		—
Allowance for state tax receivables	943		—
Tax credits	(242)		(250)
Other adjustments	722		672
Net income tax expense	$	3,370	$	2,982

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below (dollars in thousands):

	December 31, 2022		December 31, 2021
Deferred income tax assets:
Accounts receivable	$	1,507	$	1,499
Leases	42,912		44,725
Other liabilities	5,229		7,707
Debt costs	840		1,099
Interest limitation	12,152		3,423
Financing liabilities	51,725		53,651
Net operating loss	305		133
Total deferred income tax assets before valuation allowance	114,670		112,237
Less: valuation allowance	—		—
Total deferred tax assets	$	114,670	$	112,237
Deferred income tax liabilities:
Intangible assets	$	46,709	$	39,418
Property and equipment	25,821		27,075
Leases	35,141		37,002
Other	1,680		2,386
Total deferred income tax liabilities	$	109,351	$	105,881
Total net deferred income tax assets	$	5,319	$	6,356

Deferred tax assets and liabilities are computed by applying the federal and state income tax rates in effect to the gross amounts of temporary differences between the tax and financial reporting bases of our assets and liabilities and other tax attributes. In assessing if the deferred tax assets will be realized, the Company considers whether it is more likely than not that some or all of these deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which these deductible temporary differences reverse.

As of December 31, 2022 and 2021, the Company did not record a valuation allowance because of the reversal of deferred tax liabilities of the Company and expected future taxable income.

As of December 31, 2022, the Company had state net operating loss carryforwards available to offset future income of approximately $8.4 million which, if not utilized, will expire 2027 through 2042. As of December 31, 2022, the Company had deferred tax assets related to federal and state interest expense disallowance carryforwards of $12.2 million, which are available to offset future taxable income and have an indefinite carryforward period.

The Company recorded reductions to uncertain tax positions of $5.2 million and relevant interest and penalties of $0.8 million as a result of the expiration of the applicable statute of limitations as of December 31, 2022. The Company records interest and penalties related to uncertain tax positions in income tax expense. For interest and penalties, the Company recorded income tax expense of $0.2 million in each of the years ended December 31, 2022 and 2021. As of December 31, 2022 and 2021, the total interest and penalties accrued was $0.1 million and $0.7 million, respectively.

The total uncertain tax positions and accrued interest and penalties as of December 31, 2022 and 2021 were $0.5 million and $6.2 million, respectively. The uncertain tax positions and accrued interest and penalties are presented as non-current liabilities, as payments are not anticipated within one year of the balance sheet date. These non-current income tax liabilities are recorded in other long-term liabilities in the Consolidated Balance Sheets. The $0.5 million as of December 31, 2022 represents the uncertain tax positions and accrued interest and penalties that, if recognized, would favorably affect the effective income tax rate in future periods. As of December 31, 2022, the Company does not believe that the uncertain tax positions will significantly change within the next 12 months as a result of the settlement of tax audits. Interest and penalties accrued on uncertain tax positions are released upon the expiration of statutes of limitations.

All federal income tax returns are closed for tax years through 2018. For the majority of state and local tax jurisdictions in which the Company is subject to income tax audits, tax years through 2018 have been closed.

The following table reconciles uncertain tax positions (dollars in thousands):

	Year Ended December 31, 2022		Year Ended December 31, 2021
Balance at beginning of period	$	5,570	$	5,570
Decreases relating to expiration of the statute of limitations	(5,185)		—
Balance at end of period	$	385	$	5,570