Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The amounts provided for income taxes were as follows:

	Year Ended December 31,
	2023		2022		2021
Current:
U.S. Federal	$	47,991	$	35,733	$	33,398
State	11,003		10,902		14,945
	58,994		46,635		48,343
Deferred:
U.S. Federal	5,301		11,079		11,399
State	631		4,147		3,065
	5,932		15,226		14,464
Total	$	64,926	$	61,861	$	62,807

The tax effect of temporary differences which give rise to a significant portion of deferred tax assets and liabilities is as follows:

	December 31, 2023		December 31, 2022
Deferred tax assets:
Employee benefit accruals	$	6,452	$	7,471
Impairment of investments	6,451		12,342
Impact of timing of settlement payments	6,210		9,054
Various U.S. federal and state tax loss carryforwards	1,284		1,828
Operating lease liabilities	3,000		2,328
Current expected credit losses	4,020		4,111
Other	2,564		3,000
	29,981		40,134
Less: Valuation allowance	(552)		(550)
Net deferred tax assets	$	29,429	$	39,584
Deferred tax liabilities:
Basis differences on non-consolidated entities	$	(38,413)	$	(39,884)
Basis differences on fixed and intangible assets	(33,354)		(34,794)
Basis differences on inventory	(9,776)		(11,165)
Basis differences on long-term investments	(1,943)		(2,777)
Operating lease right of use assets	(2,781)		(1,998)
Other	(1,132)		—
	$	(87,399)	$	(90,618)
Net deferred tax liabilities	$	(57,970)	$	(51,034)

The Company files a consolidated U.S. income tax return that includes its more than 80%-owned U.S. subsidiaries. Standalone subsidiaries had tax-effected federal and state and local net operating loss (“NOL”) carryforwards of $1,284 and $1,828 as of December 31, 2023 and 2022, respectively, expiring through tax year 2027. The Company records a valuation allowance against deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all

deferred tax assets will not be realized. The Company had valuation allowances of $552 and $550 as of December 31, 2023 and 2022, respectively. The valuation allowances as of December 31, 2023 and 2022 primarily related to state net operating loss carryforwards of standalone subsidiaries.

The consolidated balance sheets of the Company include deferred income tax assets and liabilities, which represent temporary differences in the application of accounting rules established by U.S. GAAP and income tax laws.

Differences between the amounts provided for income taxes and amounts computed at the federal statutory tax rate are summarized as follows:

	Year Ended December 31,
	2023		2022		2021
Income before provision for income taxes	$	248,452	$	220,562	$	209,961
Federal income tax expense at statutory rate	52,175		46,318		44,092
Increases (decreases) resulting from:
State income taxes, net of federal income tax benefits	10,640		10,585		13,946
Non-deductible expenses	3,867		3,511		6,205
Excess tax benefits on stock-based compensation	(320)		(285)		(561)
Changes in valuation allowance, net of equity and tax audit adjustments	2		202		(504)
Other	(1,438)		1,530		(371)
Income tax expense	$	64,926	$	61,861	$	62,807

The Company’s income tax expense is principally attributable to the Company’s federal and state income taxes based on the Company’s earnings. The non-deductible expenses presented in the table above largely relate to the Company’s non-deductible executive compensation. The state NOLs and valuation allowance are decreased by the NOLs expiration. For the year ended December 31, 2021, the non-deductible expenses also included Distribution expenses and the federal and state NOLs and valuation allowance also decreased by the Distribution entity.

The following table summarizes the activity related to the unrecognized tax benefits:

Balance at January 1, 2021	$	1,653
Additions based on tax positions related to prior years	1,640
Settlements	(1,065)
Expirations of the statute of limitations	(19)
Balance at December 31, 2021	2,209
Additions based on tax positions related to prior years	1,409
Settlements	—
Expirations of the statute of limitations	(351)
Balance at December 31, 2022	3,267
Additions based on tax positions related to prior years	1,453
Settlements	(1,456)
Expirations of the statute of limitations	(266)
Balance at December 31, 2023	$	2,998

In the event the unrecognized tax benefits of $2,998 as of December 31, 2023 were recognized, such recognition would impact the effective tax rate. The Company classifies all tax-related interest and penalties as income tax expense. The Company had accrued, as a component of the unrecognized tax benefits, interest and penalties of $628 and $699 as of December 31, 2023 and 2022, respectively.

It is reasonably possible the Company may recognize up to approximately $331 of unrecognized tax benefits over the next 12 months, primarily pertaining to expiring statutes of limitations on prior state and local income tax return positions.

The Company files U.S. and state and local income tax returns in jurisdictions with varying statutes of limitations generally ranging from three to five years. The Company, from time-to-time, receives notices related to audits and adjustments related to its partnerships.