Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Our provision for income taxes for the years ended December 31, 2023, 2022 and 2021 consisted of the following:

	Year Ended December 31,
	2023		2022		2021
	(Dollars in thousands)
Current tax provision:
Federal	$	87,445	$	174,965	$	148,741
State	27,247		54,060		35,784
Total current	114,692		229,025		184,525
Deferred tax provision:
Federal	8,802		(26,030)		(6,699)
State	1,606		(5,280)		211
Total deferred	10,408		(31,310)		(6,488)
Provision for income taxes	$	125,100	$	197,715	$	178,037

The provision for income taxes differs from the amount that would be computed by applying the statutory federal income tax rate of 21% in 2023, 2022 and 2021 to income before income taxes as a result of the following:

	Year Ended December 31,
	2023			2022			2021
	(Dollars in thousands)
Tax expense computed at federal statutory rate	$	110,482		$	159,569		$	157,856
State income tax expense, net of federal benefit	19,523			30,213			26,441
Limitation on executive compensation	6,509			23,778			14,915
Tax expense (benefit) related to an increase (decrease) in unrecognized tax benefits	(263)			215			(4,044)
Stock based compensation (windfall)/shortfall	(6,701)			(2,553)			(1,830)
Federal energy credits	(8,938)			(15,265)			(14,558)
Rate changes	432			19			81
Change in valuation allowance	1,524			(1,065)			(1,054)
Other	2,532			2,804			230
Provision for income taxes	$	125,100		$	197,715		$	178,037
Effective tax rate	23.8		%	26.0		%	23.7		%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The tax effects of significant temporary differences that give rise to the net deferred tax asset are as follows:

	December 31,
	2023		2022
	(Dollars in thousands)
Deferred tax assets:
State net operating loss carryforwards	$	3,906	$	2,296
Stock-based compensation expense	1,492		2,896
Warranty, litigation and other reserves	16,542		17,134
Accrued compensation	9,067		8,554
Asset impairment charges	26,316		30,319
Inventory, additional net costs capitalized for tax purposes	10,955		11,399
Other, net	406		1,861
Total deferred tax assets	68,684		74,459
Valuation allowance	(3,775)		(2,251)
Total deferred tax assets, net of valuation allowance	64,909		72,208
Deferred tax liabilities:
Property, equipment and other assets	15,343		11,714
Deferral of profit on home sales	6,139		5,592
Other, net	4,597		5,650
Total deferred tax liabilities	26,079		22,956
Net deferred tax asset	$	38,830	$	49,252

At December 31, 2023, we had no federal net operating loss or alternative minimum tax carryforwards. However, we had $3.9 million in tax-effected state net operating loss carryforwards. The state operating loss carryforwards, if unused, begin expiring in 2028.

At December 31, 2023, we had a valuation allowance of $3.8 million, an increase of $1.5 million from the prior year. The valuation allowance is related to various state net operating loss carryforwards where realization is uncertain at this time due to the limited carryforward periods coupled with minimal activity that exists in certain states.

At December 31, 2023 and 2022, our total liability for uncertain tax positions including interest and penalties was $0.4 million and $0.6 million, respectively. The following table summarizes activity for the gross unrecognized tax benefit component of our total liability for uncertain tax positions for the years ended December 31, 2023, 2022 and 2021:

	Year Ended December 31,
	2023		2022		2021
	(Dollars in thousands)
Gross unrecognized tax benefits at beginning of year	$	646	$	383	$	8,497
Increases related to prior year tax positions	79		357		162
Decreases related to prior year tax positions	(250)		—		—
Lapse of applicable statute of limitations	(70)		(94)		(8,276)
Gross unrecognized tax benefits at end of year	$	405	$	646	$	383

During the year ended December 31, 2023, we experienced a decrease of $0.2 million in the uncertain tax positions related to state tax filings. At December 31, 2023 and 2022, there was $0.4 million and $0.6 million, respectively, of unrecognized tax benefits that if recognized, would reduce our effective tax rate.

The interest and penalties, net of federal benefit for the years ended December 31, 2023, 2022 and 2021 was $(0.1) million, $(0.1) million and $(0.8) million, respectively, and are included in provision for income taxes in the consolidated statements of operations and comprehensive income. We are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. We are subject to U.S. federal income tax examination for calendar tax years ending 2020 through 2023. Additionally, we are subject to various state income tax examinations for the 2019 through 2023 calendar tax years.