Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

19. Income Taxes

The benefit (provision) for income taxes is comprised of the following.

	For the Years Ended December 31,
(in thousands)	2022		2021		2020
Federal:
Current	$	(17)	$	161	$	55
Deferred	1,325		9,837		5,840
Total federal	1,308		9,998		5,895
State:
Current	251		(1,835)		(11,247)
Deferred (included in federal above)	—		—		—
Total state	251		(1,835)		(11,247)
Total	$	1,559	$	8,163	$	(5,352)

A reconciliation of the benefit (provision) for income taxes to the amount computed at the U.S. Federal statutory rate of 21% is as follows.

	For the Years Ended December 31,
(in thousands)	2022		2021		2020
Tax benefit (provision) at U.S. statutory rate	$	50,397	$	22,565	$	(18,348)
State taxes, net of federal income tax	10,811		7,673		(11,909)
Valuation allowance	(57,080)		13,027		27,913
Goodwill derecognition	—		(31,829)		—
Stock compensation	(181)		(1,856)		(2,118)
Other	(2,388)		(1,417)		(890)
Total	$	1,559	$	8,163	$	(5,352)

Significant components of the Company's deferred tax assets and liabilities are as follows.

	As of December 31,
(in thousands)	2022		2021
Deferred income tax assets:
Operating loss carryforwards	$	361,160	$	281,384
Operating lease obligations	199,226		208,460
Tax credits	50,415		50,415
Accrued expenses	42,828		56,151
Intangible assets	39,360		50,576
Financing lease obligations	12,749		87,992
Capital loss carryforward	2,140		2,205
Other	3,091		6,450
Total gross deferred income tax asset	710,969		743,633
Valuation allowance	(425,043)		(367,963)
Net deferred income tax assets	285,926		375,670
Deferred income tax liabilities:
Operating lease right-of-use assets	(149,881)		(158,237)
Property, plant and equipment	(122,377)		(202,103)
Investment in unconsolidated ventures	(12,064)		(15,051)
Total gross deferred income tax liability	(284,322)		(375,391)
Net deferred tax asset (liability)	$	1,604	$	279

A reconciliation of the beginning and ending amounts of the deferred tax valuation allowance is as follows:

			Additions
Year Ended	Balance at beginning of period		Charged to costs and expenses			Charged to other accounts		Deductions		Balance at end of period
December 31, 2020	$	408,903	$	(27,913)	(1)	$	—	$	—	$	380,990
December 31, 2021	$	380,990	$	(13,027)	(2)	$	—	$	—	$	367,963
December 31, 2022	$	367,963	$	57,080	(3)	$	—	$	—	$	425,043

(1) Reduction of valuation allowance for federal and state net operating losses.

(2) Reduction of valuation allowance for federal and state net operating losses and credits.

(3) Increase to valuation allowance for federal and state net operating losses and credits.

As of December 31, 2022 and 2021, the Company had federal net operating loss carryforwards generated in 2017 and prior of approximately $802.2 million and $808.7 million, respectively, which are available to offset future taxable income from 2023 through 2037. Additionally, as of December 31, 2022 and 2021, the Company had federal net operating loss carryforwards generated after 2017 of $659.7 million and $335.8 million, respectively, which have an indefinite life, but with usage limited to 80% of taxable income in any given year. The Company had state capital loss carryforwards of $2.1 million and $2.2 million as of December 31, 2022 and 2021, respectively, which are available to offset future capital gains through 2023, and are fully offset by a valuation allowance. The Company determined that a valuation allowance was required after consideration of the Company's estimated future reversal of existing timing differences as of December 31, 2022 and 2021. The Company does not consider estimates of future taxable income in its determination due to the existence of cumulative historical operating losses. The required valuation allowance as of December 31, 2022 and 2021 was $425.0 million and $368.0 million, respectively.

The Company has recorded valuation allowances of $372.5 million and $315.3 million against its federal and state net operating losses as of December 31, 2022 and 2021, respectively. The Company has recorded a valuation allowance against its state capital loss carryforward of $2.1 million and $2.2 million as of December 31, 2022 and 2021, respectively. The Company's sale of its ownership interest in the CCRC Venture in 2020 utilized all of the capital loss carryforward for federal tax purposes and a portion of its net operating losses. The Company recorded a decrease in the valuation allowance of $95.2 million for the year

ended December 31, 2021 as a result of the HCS Sale that occurred on July 1, 2021, partially offset by an increase in the valuation allowance of $82.2 million established against current operating losses during the year ended December 31, 2021. The Company also recorded a valuation allowance against federal and state credits of $50.4 million as of both December 31, 2022 and 2021.

As of both December 31, 2022 and 2021, the Company had gross tax affected unrecognized tax benefits of $18.1 million, which, if recognized, would result in an income tax benefit recorded in the consolidated statement of operations. Interest and penalties related to these tax positions are classified as tax expense in the Company's consolidated financial statements. Total interest and penalties reserved is $0.1 million as of both December 31, 2022 and 2021. As of December 31, 2022, the Company's tax returns for years 2018 through 2021 are subject to future examination by tax authorities. In addition, the net operating losses from prior years are subject to adjustment under examination. The Company does not expect that unrecognized tax benefits for tax positions taken with respect to 2022 and prior years will significantly change in 2023.

A reconciliation of the unrecognized tax benefits is as follows.

	For the Years Ended December 31,
(in thousands)	2022		2021
Balance at beginning of period	$	18,089	$	18,385
Additions for tax positions related to the current year	—		—
Reductions for tax positions related to prior years	(1)		(296)
Balance at end of period	$	18,088	$	18,089