Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company files a consolidated U.S. federal income tax return and various state income tax returns. The provision for the federal and state income taxes attributable to income (loss) consists of the following components:

	Years Ended December 31,
(in thousands)	2020			2019			2018
Current (benefit) expense
Federal taxes	$	(13,748)		$	(16,393)		$	(6,033)
State taxes	(2,148)			(282)			833
Total current provision	(15,896)			(16,675)			(5,200)
Deferred expense (benefit)
Federal taxes	13,729			16,453			4,433
State taxes	1,581			395			(576)
Total deferred provision	15,310			16,848			3,857
Income tax (benefit) expense	$	(586)		$	173		$	(1,343)
Effective tax rate	(28.7)		%	6.8		%	(183.0)		%

A reconciliation of income taxes determined by applying the federal and state tax rates to income (loss) is as follows:

	Years Ended December 31,
(in thousands)	2020		2019		2018
Expected tax expense at federal statutory	$	428	$	538	$	154
State income taxes, net of federal tax effect	54		15		(202)
Revaluation of U.S. deferred income taxes	—		—		(760)
Excess tax benefit from share based compensation and other, net	(1,068)		(380)		(535)
Income tax (benefit) expense	$	(586)	$	173	$	(1,343)

The effective tax rate in 2020 decreased from 2019, primarily as a result of higher excess tax benefits from share based compensation.

The Company's cash payments for income taxes were $11.2 million in the year ended December 31, 2020. The Company received cash refunds for income taxes of $9.5 million in the year ended December 31, 2019.

Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply in the year of reversal or settlement and arise from temporary differences between the US GAAP and tax bases of the following assets and liabilities:

(in thousands)	December 31, 2020		December 31, 2019
Deferred tax assets:
Leases	$	123,129	$	106,564
Asset retirement obligations	10,403		9,957
Net operating loss carry-forwards	7,723		10,071
Pension liabilities	3,868		3,161
Accruals and stock based compensation	3,093		1,935
Other	5,002		1,408
Total gross deferred tax assets	153,218		133,096
Less valuation allowance	—		—
Net deferred tax assets	153,218		133,096
Deferred tax liabilities:
Property, plant and equipment	127,602		110,676
Leases	126,458		105,475
Intangible assets	25,722		27,201
Prepaid assets and other	24,088		27,311
Total gross deferred tax liabilities	303,870		270,663
Net deferred tax liabilities	$	150,652	$	137,567

In assessing the ability to realize deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon generating future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, taxable income in prior carryback years if available and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods for which the deferred tax assets are deductible, the Company believes it more likely than not that the net deferred tax assets will be realized.

The Company has a deferred tax asset of $7.7 million related to federal and various state net operating losses. As of December 31, 2020, the Company had approximately $36.7 million of federal net operating losses expiring through 2027. The Company also had approximately $0.1 million of state net operating losses expiring through 2036.

As of December 31, 2020 and 2019, the Company had no unrecognized tax benefits. 

The Company is not currently subject to state or federal income tax audits as of December 31, 2020. The Company's returns are generally open to examination from 2017 forward and the net operating losses acquired from nTelos are open to examination from 2002 forward.