Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

6. Income Taxes

Provision (benefit) for income taxes are as follows:

	2023			2022			2021
	(In Thousands)
Current:
Federal	$	—		$	—		$	—
State		607			2,320			(250	)
Total Current	$	607		$	2,320		$	(250	)
Deferred:
Federal	$	7,767		$	43,217		$	(6,217	)
State		(2,401	)		(6,363	)		1,911
Total Deferred	$	5,366		$	36,854		$	(4,306	)
Provision (benefit) for income taxes	$	5,973		$	39,174		$	(4,556	)

The current provision (benefit) for federal and state income taxes shown above includes federal and state income tax after the consideration of permanent and temporary differences between income for GAAP and tax purposes.

The deferred tax provision (benefit) results from the recognition of changes in our prior year deferred tax assets and liabilities, and the utilization of federal and state NOL carryforwards and other temporary differences. We reduce income tax expense for tax credits in the year they arise and are earned. On December 31, 2023, our gross amount of tax credits available to offset state income taxes was $4.2 million ($3.3 million net of federal benefit). Most of these tax credits carryforward for 9 years and begin expiring in 2024. The gross amount of federal tax credits was $8.1 million. These credits carryforward for 20 years and begin expiring in 2034.

In 2023, we utilized approximately $76.7 million and $66.0 million of federal and state NOL carryforwards, respectively, to reduce tax liabilities. In 2022, we utilized approximately $240.0 million and $243.0 million of federal and state NOL carryforwards, respectively, to reduce tax liabilities. In 2021, we utilized approximately $64.0 million and $56.0 million of federal and state NOL carryforwards, respectively, to reduce tax liabilities. On December 31, 2023, we have remaining federal and state tax NOL carryforwards of $274.9 million and $360.7 million, respectively. The federal NOL carryforwards begin expiring in 2036 and the state NOL carryforwards began expiring in 2024.

We considered both positive and negative evidence in our determination of the need for valuation allowances for the deferred tax assets associated with federal and state NOLs and federal credits and in conjunction with the IRC Section 382 limitation. Information evaluated includes our financial position and results of operations for the current and preceding years, the availability of deferred tax liabilities and tax carrybacks, as well as an evaluation of currently available information about future years. Valuation allowances are reflective of our quarterly analysis of the four sources of taxable income, including the calculation of the reversal of existing tax assets and liabilities, the impact of annual utilization limitations of interest expense and net operating losses and our results of operations. Based on our analysis, we believe that it is more-likely-than-not that all of our federal deferred tax assets will be utilized and a portion of our state deferred tax assets will not be able to be utilized. Information relating to our valuation allowance are included in the tables below. In 2023, the provision for income taxes includes a net increase of approximately $0.3 million of state valuation allowance primarily due to lower future income. There is no federal valuation allowance remaining as of December 31, 2023 or 2022.

Deferred tax assets and liabilities include temporary differences and carryforwards as follows:

	December 31,
	2023			2022
	(In Thousands)
Deferred compensation	$	2,515		$	2,354
Other accrued liabilities		283			1,813
Lease liability		5,941			5,215
Interest expense carryforward		14,375			16,025
Net operating loss		73,891			93,201
Other		11,649			11,950
Less valuation allowance on deferred tax assets		(15,175	)		(14,916	)
Total deferred tax assets	$	93,479		$	115,642
Property, plant and equipment		(152,802	)		(169,507	)
Right-of-use-assets		(5,937	)		(5,340	)
Prepaid and other insurance reserves		(3,593	)		(4,282	)
Total deferred tax liabilities	$	(162,332	)	$	(179,129	)
Net deferred tax liabilities	$	(68,853	)	$	(63,487	)

All of our income (loss) before taxes relates to domestic operations. Detailed below are the differences between the amount of the provision (benefit) for income taxes and the amount which would result from the application of the federal statutory rate to “Income (loss) before benefit for income taxes.”

	2023			2022			2021
	(In Thousands)
Provision (benefit) for income taxes at federal   statutory rate	$	7,118		$	56,543		$	8,187
State current and deferred income tax provision (benefit)		1,238			9,374			1,833
Valuation allowance - Federal		—			(12,701	)		(13,400	)
Valuation allowance - State		259			(19,351	)		(4,286	)
State tax rate changes		(3,499	)		2,824			7,360
Tax credits		—			—			(2,835	)
PPP loan forgiveness		—			—			(2,456	)
Other		857			2,485			1,041
Provision (benefit) for income taxes	$	5,973		$	39,174		$	(4,556	)

A reconciliation of the beginning and ending amount of uncertain tax positions is as follows:

	2023		2022		2021
	(In Thousands)
Balance at beginning of year	$	—	$	—	$	464
Additions based on tax positions related to the current year		—		—		—
Reductions for tax positions of prior years		—		—		(464	)
Balance at end of year	$	—	$	—	$	-

We expect that the amount of unrecognized tax benefits may change as the result of ongoing operations, the outcomes of audits, and the expiration of statute of limitations. This change is not expected to have a significant effect on our results of operations or financial condition. As of December 31, 2023, there is no remaining uncertain tax position.

We record interest related to unrecognized tax positions in interest expense and penalties in operating other expense. For 2023, 2022 and 2021, the amounts for interest and penalties associated with unrecognized tax positions were minimal. As of December 31, 2023, there was no accrued interest or penalties (none as of December 31, 2022).

LSB and certain of its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the 2020-2023 years remain open for all purposes of examination by the U.S. Internal Revenue Service and other major tax jurisdictions. Additionally, the 2014-2019 years remain subject to examination for determining the amount of net operating loss and other carryforwards.