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Income Taxes
12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The following table presents the Company's income tax expense:
 
2019
 
2018
 
2017
 
(In thousands)
Current expense:
 
 
 
 
 
Federal
$
50,703

 
$
44,357

 
$
4,868

State
16,616

 
22,300

 
8,337

Foreign
5,526

 
3,124

 
133

 
72,845

 
69,781

 
13,338

Deferred expense (benefit):
 
 
 
 
 
Federal
28,618

 
59,508

 
(323,326
)
State
3,712

 
1,639

 
17,731

Foreign
(1,377
)
 
461

 
541

 
30,953

 
61,608

 
(305,054
)
Income tax expense (benefit)
$
103,798

 
$
131,389

 
$
(291,716
)
 
 
 
 
 
 

Rate Reconciliation — Expected tax expense is computed by applying the US federal corporate income tax rate of 21.0% to earnings before income taxes for 2019 and 2018, and 35.0% for 2017. Actual tax expense differs from expected tax expense as follows:
 
2019
 
2018
 
2017
 
(In thousands)
Computed "expected" tax expense
$
86,935

 
$
117,478

 
$
67,798

Increase (decrease) in income taxes resulting from:
 
 
 
 
 
State income taxes, net of federal income tax benefit
17,803

 
19,256

 
4,871

Statutory rate change effect on deferred taxes

 
452

 
(367,000
)
Other
(940
)
 
(5,797
)
 
2,615

Income tax expense (benefit)
$
103,798

 
$
131,389

 
$
(291,716
)
 
 
 
 
 
 


Deferred Income Taxes — The components of the net deferred tax asset (liability) included in "Deferred tax liabilities" in the consolidated balance sheets were:
 
December 31,
 
2019
 
2018
 
(In thousands)
Deferred tax assets:
 
 
 
Claims accrual
$
80,019

 
$
79,675

Allowance for doubtful accounts
5,478

 
5,333

Amortization of stock options
5,769

 
5,325

Accrued liabilities
32,284

 
27,692

Vacation accrual
3,380

 
3,499

Other
8,595

 
8,759

Total deferred tax assets
135,525

 
130,283

Valuation allowance

 

Total deferred tax assets, net
135,525

 
130,283

Deferred tax liabilities:
 
 
 
Property and equipment, principally due to differences in depreciation
(550,521
)
 
(503,570
)
Prepaid taxes, licenses, and permits deducted for tax purposes
(11,168
)
 
(10,933
)
Intangible assets
(345,555
)
 
(354,944
)
Other

 
(374
)
Total deferred tax liabilities
(907,244
)
 
(869,821
)
Deferred tax liabilities
$
(771,719
)
 
$
(739,538
)
 
 
 
 

Valuation Allowance — As of December 31, 2019, the Company had a federal net operating loss carryforward with estimated tax effects of $0.2 million. The federal net operating loss will expire at various times between 2030 and 2032. As of December 31, 2019, the Company had state income tax credit carryforwards for which a deferred tax asset was recorded in the amount of $0.1 million and expires in the year 2022. The Company has not established a valuation allowance as it has been determined that, based upon available evidence, a valuation allowance is not required. Management asserts that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets. All other deferred tax assets are expected to be realized and utilized by continued profitability in future periods.
Cumulative Undistributed Foreign Earnings — As of December 31, 2019, foreign withholding taxes have not been provided on approximately $85.7 million of cumulative undistributed earnings of foreign subsidiaries. The earnings are considered to be permanently reinvested outside the US. As such, the Company is not required to provide withholding taxes on these earnings until they are repatriated in the form of dividends or otherwise.
Unrecognized Tax Benefits — The Company's unrecognized tax benefits as of December 31, 2019 would favorably impact the Company's effective tax rate if subsequently recognized.
See Note 2 for accounting policy related to the Company's income taxes.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits for 2019, 2018, and 2017 is as follows:
 
2019
 
2018
 
2017
 
(In thousands)
Unrecognized tax benefits at beginning of year
$
7,423

 
$
7,096

 
$
729

Increases for tax positions taken prior to beginning of year
38

 
1,056

 
5,432

Increases for tax positions taken in the current year

 

 
935

Decreases for tax positions taken prior to beginning of year
(3,378
)
 
(729
)
 

Unrecognized tax benefits at end of year
$
4,083

 
$
7,423

 
$
7,096

 
 
 
 
 
 

Increases for tax positions related to the benefit received for federal deductions taken on the Company's subsidiary amended return for the 2015 tax year. Decreases in tax positions related primarily to the release of the FIN 48 reserve for federal deductions, federal credits, and various state apportionment issues for years ranging from 2000 through 2013. The Company anticipates a decrease of $1.0 million of unrecognized tax benefits during the next twelve months.
Interest and Penalties — Accrued interest and penalties as of December 31, 2019 and 2018 were approximately $0.4 million and $1.4 million, respectively.
Tax Examinations — The Company is currently under examination by the IRS for the 2012 tax year and management does not expect any adjustments that would have a material impact on the Company's effective tax rate. Certain of the Company's subsidiaries are also currently under examination by various state jurisdictions for tax years ranging from 2013 to 2017. At the completion of these examinations, management does not expect any adjustments that would have a material impact on the Company's effective tax rate. Years subsequent to 2014 remain subject to examination.