Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXESThe provision for income taxes is based on the earnings reported in the accompanying consolidated financial statements. The Company recognizes deferred income tax liabilities and assets for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred income tax liabilities and assets are determined based on the cumulative temporary differences between the financial statement and tax basis of assets and liabilities using enacted tax rates expected to be applied to taxable income in years which those temporary

differences are expected to be recovered or settled. Deferred income tax expense is measured by the net change in deferred income tax assets and liabilities during the year.

The foreign components of income before the provision for income taxes were not material for the years ended December 31, 2022, 2021 and 2020. The components of the provision for income taxes are as follows:

	2022		2021		2020
Currently payable:
Federal	$	62,670,986	$	89,507,896	$	67,606,617
State	4,310,783		5,642,926		10,180,218
Foreign	1,761,732		2,098,433		1,882,195
Total	68,743,501		97,249,255		79,669,030
Deferred income tax benefit:
Primarily federal	(17,777,777)		(41,694,751)		(15,419,722)
Provision for income taxes	$	50,965,724	$	55,554,504	$	64,249,308

The effective income tax rates are different from the statutory federal income tax rates for the following reasons:

	2022		2021		2020
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal income tax benefit	0.9		0.7		2.1
Research tax credit	(1.8)		(1.0)		(1.4)
(Decrease) Increase in reserve for uncertain tax provisions	(0.2)		0.1		(0.1)
Non-deductible executive compensation	0.3		0.1		—
Non-deductible expenses	0.3		—		0.1
Foreign tax credit	(0.3)		(0.2)		(0.1)
Foreign derived intangible income deduction	(6.2)		(6.3)		(5.2)
Stock compensation	(0.6)		(1.3)		(1.0)
Other	0.4		0.2		0.2
Effective income tax rate	13.8	%	13.3	%	15.6	%

The tax effect of temporary differences which give rise to deferred income tax assets and liabilities at    December 31, 2022 and 2021, are as follows: 

	December 31,
	2022		2021
Assets:
Accruals not currently deductible	$	9,778,184	$	12,823,493
Research and development costs	58,501,232		49,099,538
Stock based compensation	14,670,250		13,707,737
Other	4,722,513		2,118,484
Total deferred income tax assets	$	87,672,179	$	77,749,252
Liabilities:
Excess tax over book depreciation	$	(3,460,485)	$	(20,728,577)
Goodwill	(42,580,026)		(37,999,022)
Intangible assets	(13,268,772)		(11,718,904)
Other	(2,834,196)		(2,507,071)
Total deferred income tax liabilities	$	(62,143,479)	$	(72,953,574)
Net deferred income taxes	$	25,528,700	$	4,795,678

Net operating loss carryforwards with no expiration totaling $7.7 million are available to reduce future taxable earnings of certain domestic and foreign subsidiaries.

Income taxes paid in cash were approximately $35.2 million, $105.8 million and $61.9 million in 2022, 2021 and 2020, respectively.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	2022		2021		2020
Beginning of year	$	5,275,000	$	4,864,000	$	6,392,000
Additions based on tax positions related to the current year	951,000		1,023,000		918,000
Additions for tax positions in prior years	353,000		364,000		770,000
Reductions for tax positions in prior years	(26,000)		(51,000)		(2,907,000)
Reductions as a result of a lapse of the applicable statute of limitations	(1,923,000)		(925,000)		(309,000)
End of year	$	4,630,000	$	5,275,000	$	4,864,000

If recognized, unrecognized tax benefits would affect the effective tax rate.

The Company recognizes interest and penalties related to unrecognized tax benefits through the provision for income taxes. The Company has accrued approximately $379,000, $605,000, and $577,000 for interest as of December 31, 2022, 2021, and 2020, respectively. Interest expensed during 2022, 2021 and 2020 was not considered significant.

The Company is also subject to periodic and routine audits in both domestic and foreign tax jurisdictions. It is reasonably possible that the amounts of unrecognized tax benefits could change as a result of an audit, new positions taken on income tax returns, settlement of tax positions and the closing of statute of limitations. It is not expected that any change will be material to the Company’s consolidated financial statements.

For the majority of tax jurisdictions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2018.