Income Taxes

12 Months Ended

Dec. 31, 2021

Components Of Income Tax Expense Benefit Continuing Operations [Abstract]

Income Taxes

NOTE 24 – Income Taxes

The provision for income taxes consists of the following (in thousands):

	Year Ended December 31,
	2021		2020			2019
Current taxes:
Federal	$	167,258	$	143,859		$	123,802
State		39,911		42,705			30,464
Foreign		2,950		(236	)		1,684
		210,119		186,328			155,950
Deferred taxes:
Federal		19,747		(31,019	)		(7,027	)
State		5,640		(5,803	)		4,266
Foreign		6,717		(1,818	)		(4,037	)
		32,104		(38,640	)		(6,798	)
Provision for income taxes	$	242,223	$	147,688		$	149,152

Reconciliation of the statutory federal income tax rate with our company’s effective income tax rate is as follows (in thousands):

	Year Ended December 31,
	2021			2020			2019
Statutory rate	$	224,087		$	136,744		$	125,485
State income taxes, net of federal income tax		37,169			27,934			28,333
Change in uncertain tax position		841			666			2,661
Foreign tax rate difference		125			(2,032	)		(629	)
Excess tax benefit from stock-based compensation		(32,004	)		(21,605	)		(9,670	)
Non-deductible business expenses		9,732			7,957			8,390
Other, net		2,273			(1,976	)		(5,418	)
	$	242,223		$	147,688		$	149,152

Tax effect of temporary differences and carryforwards that comprise significant portions of deferred tax assets and liabilities (in thousands):

	December 31,
	2021			2020
Deferred tax assets:
Lease liabilities	$	187,576		$	211,524
Deferred compensation		79,081			79,068
Accrued expenses		46,539			73,835
Receivable reserves		38,432			41,963
Net operating loss carryforwards		24,837			32,727
Depreciation		1,302			—
Other		4,155			3,311
Total deferred tax assets		381,922			442,428
Valuation allowance		(14,515	)		(11,740	)
		367,407			430,688
Deferred tax liabilities:
Lease ROU asset		(186,168	)		(210,670	)
Goodwill and other intangibles		(54,887	)		(51,189	)
Unrealized gain on investments		(7,841	)		(11,585	)
Prepaid expenses		(7,228	)		(5,396	)
Depreciation		—			(15,371	)
		(256,124	)		(294,211	)
Net deferred tax asset	$	111,283		$	136,477

Our net deferred tax asset at December 31, 2021, includes net operating loss carryforwards of $193.5 million that expire between 2022 and 2041. Certain of our net operating loss carryforwards do not expire. A valuation allowance is recorded to the extent that it is more likely than not that any portion of the deferred tax asset will not be realized. The valuation allowance was increased by $2.8 million. We believe the realization of the remaining net deferred tax asset of $111.3 million is more likely than not based on the ability to carry back losses against prior year taxable income for tax years before 2021 and carry forward net operating losses indefinitely after 2021, and expectations of future taxable income, which is supported by a history of cumulative income.

The current tax payable, included in accounts payable and accrued expenses, is $7.3 million and $38.2 million as of December 31, 2021 and 2020, respectively. The current tax receivable, included in other assets, is $44.2 million as of December 31, 2021. At December 31, 2020, the Company did not have a tax receivable.

As of December 31, 2021, we considered all undistributed earnings of non-U.S. subsidiaries to be permanently reinvested. Therefore, we have not provided for any U.S. deferred income taxes. Because the time or manner of repatriation is uncertain, we cannot determine the impact of local taxes, withholding taxes and foreign tax credits associated with the future repatriation of such earnings, and therefore cannot quantify the tax liability that would be payable in the event all such foreign earnings are repatriated.

Uncertain Tax Positions

As of December 31, 2021 and 2020, we had $4.9 million and $4.0 million, respectively, of gross unrecognized tax benefits, all of which, if recognized, would impact the effective tax rate. We recognize interest and penalties related to uncertain tax positions in provision for income taxes in the consolidated statements of operations. As of December 31, 2021 and 2020, we had accrued interest and penalties of $0.3 million and $0.4 million, respectively, before benefit of federal tax deduction, included in accounts payable and accrued expenses in our consolidated statements of financial condition. The amount of interest and penalties recognized in our consolidated statements of operations for the years ended December 31, 2021, 2020, and 2019, was not significant.

The following table summarizes the activity related to our company’s unrecognized tax benefits from January 1, 2019 to December 31, 2021 (in thousands):

	Year Ended December 31,
	2021			2020			2019
Beginning balance	$	3,962		$	3,387		$	312
Increase related to prior year tax positions		2,719			977			2,173
Decrease related to prior year tax positions		(119	)		(11	)		(54	)
Increase related to current year tax positions		745			790			956
Decrease related to settlements with taxing authorities		(2,370	)		(1,181	)		—
Decrease related to lapsing of statute of limitations		(13	)		—			—
Ending balance	$	4,924		$	3,962		$	3,387

We file income tax returns with the U.S. federal jurisdiction, various states, and certain foreign jurisdictions. We are not subject to U.S. federal examination for taxable years before 2017. We are not subject to certain state and local, or non-U.S. income tax examinations for taxable years before 2014.

There is a reasonable possibility that the unrecognized tax benefits will change within the next 12 months as a result of the expiration of various statutes of limitations or for the resolution of U.S. federal and state examinations, but we do not expect this change to be material to the consolidated financial statements.