Income Taxes

12 Months Ended

Dec. 31, 2019

INCOME TAXES

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into law. In accordance with GAAP, the effects of this legislation were recognized in 2017 upon enactment. The primary impact of the Act for us related to the reduction of the Federal corporate income tax rate from 35% to 21% beginning in 2018. At December 31, 2017, our previously recorded deferred tax assets and liabilities were remeasured to reflect the 21% rate at which these assets and liabilities would be realized in future periods. The net change in deferred taxes was recorded through our provision for income taxes.

The components of the provision for (benefit from) income taxes for the years ended December 31, 2019, 2018, and 2017, were as follows:



(in millions)	2019			2018		2017
Current:
Federal	$	43.0		$	21.7	$	19.3
State and other	8.3			11.8		5.6
	51.3			33.5		24.9
Deferred:
Federal	(1.3		)	54.2		71.4
State and other	1.1			6.7		6.7
Impact of the Tax Cuts and Jobs Act	—			1.3		(229.5		)
	(0.2		)	62.2		(151.4		)
Total provision for (benefit from) income taxes	$	51.1		$	95.7	$	(126.5	)

Foreign operations of the Company are insignificant in relation to our overall operating results.

The provision for income taxes for the years ended December 31, 2019, 2018, and 2017 differed from the amounts computed using the federal statutory rates in effect of 21% for December 31, 2019 and 2018 and 35% for December 31, 2017, as follows:



	2019					2018				2017
(in millions, except percentages)	Dollar Impact			Rate		Dollar Impact		Rate		Dollar Impact			Rate
Income tax at federal statutory rate	$	41.6		21.0	%	$	76.6	21.0	%	$	92.2		35.0	%
State tax—net of federal effect	8.1			4.1		15.4		4.2		8.6			3.3
Nondeductible meals and entertainment	2.1			1.0		2.1		0.6		3.4			1.3
Impact of the Tax Cuts and Jobs Act	—			—		1.3		0.3		(229.5		)	(87.1	)
Other—net	(0.7		)	(0.3	)	0.3		0.1		(1.2		)	(0.5	)
Total provision for (benefit from) income taxes	$	51.1		25.8	%	$	95.7	26.2	%	$	(126.5	)	(48.0	)%

The components of the net deferred tax liability included in deferred income taxes in the consolidated balance sheets as of December 31, 2019 and 2018, were as follows:



(in millions)	2019			2018
Deferred tax assets:
Allowance for doubtful accounts	$	0.4		$	1.1
Compensation and employee benefits	9.6			14.7
Insurance and claims accruals	2.4			2.6
Operating lease liabilities	20.2			—
State net operating losses and credit carryforwards	12.7			18.2
Other	4.8			5.0
Total gross deferred tax assets	50.1			41.6
Valuation allowance	(2.0		)	(5.8		)
Total deferred tax assets—net of valuation allowance	48.1			35.8
Deferred tax liabilities:
Property and equipment	467.9			466.5
Prepaid expenses	4.2			4.3
Intangible assets	3.5			11.1
Operating lease right-of-use assets	18.0			—
Other	3.5			4.5
Total gross deferred tax liabilities	497.1			486.4
Net deferred tax liability	$	449.0		$	450.6

Unrecognized Tax Benefits

Our unrecognized tax benefits as of December 31, 2019 would reduce the provision for income taxes if subsequently recognized. Potential interest and penalties related to unrecognized tax benefits are recorded in income tax expense. Interest and penalties recorded in income tax expense for the years ended December 31, 2019, 2018, and 2017 were immaterial. Accrued interest and penalties for such unrecognized tax benefits as of December 31, 2019 and 2018 were $2.1 million and $1.4 million, respectively. We expect no significant increases or decreases for unrecognized tax benefits during the twelve months immediately following the December 31, 2019 reporting date.

As of December 31, 2019, 2018, and 2017, a reconciliation of the beginning and ending amount of unrecognized tax benefits, which is recorded as other noncurrent liabilities in the consolidated balance sheets, is as follows:



(in millions)	2019		2018			2017
Gross unrecognized tax benefits—beginning of year	$	3.3	$	2.8		$	2.4
Gross increases—tax positions related to current year	0.6		0.8			0.4
Gross increases—tax positions taken in prior years	0.4		—			—
Lapse of statutes	—		(0.3		)	—
Gross unrecognized tax benefits—end of year	$	4.3	$	3.3		$	2.8

Tax Examinations

We file a U.S. federal income tax return, as well as income tax returns in a majority of state tax jurisdictions. We also file returns in foreign jurisdictions. The years 2016, 2017, and 2018 are open for examination by the Internal Revenue Service (“IRS”), and various years are open for examination by state and foreign tax authorities. In September 2019, the statute for 2015 expired. State and foreign jurisdictional statutes of limitations generally range from three to four years.

Carryforwards

As of December 31, 2019, we had $213.7 million of state net operating loss carryforwards which are subject to expiration from 2020 to 2040. We also had state credit carryforwards of $0.1 million, which are subject to expiration from 2020 to 2027, and no capital loss carryforwards. The deferred tax assets related to carryforwards at December 31, 2019 were $12.6 million for state net operating loss carryforwards and $0.1 million for state credit carryforwards. Carryforwards are reviewed for recoverability based on historical taxable income, the expected reversals of existing temporary differences, tax-planning strategies, and projections of future taxable income. At December 31, 2019, we carried a total valuation allowance of $2.0 million against state deferred tax assets.