XML 29 R18.htm IDEA: XBRL DOCUMENT v3.23.3
Income Taxes
 9 Months Ended
Aug. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income Tax Expense. Our income tax expense and effective tax rates were as follows (dollars in thousands):
 Three Months Ended August 31,Nine Months Ended August 31,
 2023202220232022
Income tax expense $44,600 $70,900 $131,800 $186,900 
Effective tax rate
22.9 %21.7 %23.1 %23.7 %
Our income tax expense and effective tax rate for the three months ended August 31, 2023 included the favorable impact of $6.9 million of federal tax credits we recognized primarily from building energy-efficient homes and $1.9 million of excess tax benefits related to stock-based compensation, partly offset by $2.6 million of nondeductible executive compensation expense. Our income tax expense and effective tax rate for the three months ended August 31, 2022 reflected the favorable impact of $15.3 million of federal tax credits we recognized primarily from building energy-efficient homes, partly offset by $2.9 million of nondeductible executive compensation expense.
For the nine months ended August 31, 2023, our income tax expense and effective tax rate included the favorable impacts of $19.4 million of federal tax credits we recognized primarily from building energy-efficient homes and $5.7 million of excess tax benefits related to stock-based compensation, partly offset by $9.2 million of nondeductible executive compensation expense. Our income tax expense and effective tax rate for the nine months ended August 31, 2022 reflected the favorable impacts of $16.1 million of federal tax credits we recognized primarily from building energy-efficient homes and $2.2 million of excess tax benefits related to stock-based compensation, partly offset by $6.8 million of nondeductible executive compensation expense.
Deferred Tax Asset Valuation Allowance. We evaluate our deferred tax assets quarterly to determine if adjustments to our valuation allowance are required based on the consideration of all available positive and negative evidence using a “more likely than not” standard with respect to whether deferred tax assets will be realized. Our evaluation considers, among other factors, our historical operating results, our expectation of future profitability, the duration of the applicable statutory carryforward periods, and conditions in the housing market and the broader economy. The ultimate realization of our deferred tax assets depends primarily on our ability to generate future taxable income during the periods in which the related deferred tax assets become deductible. The value of our deferred tax assets depends on applicable income tax rates.
Our deferred tax assets of $163.1 million as of August 31, 2023 and $178.0 million as of November 30, 2022 were each partly offset by a valuation allowance of $17.1 million. The deferred tax asset valuation allowances as of August 31, 2023 and November 30, 2022 were primarily related to certain state net operating losses that had not met the “more likely than not” realization standard at those dates. Based on the evaluation of our deferred tax assets as of August 31, 2023, we determined that most of our deferred tax assets would be realized. Therefore, no adjustments to our deferred tax asset valuation allowance were needed for the nine months ended August 31, 2023.
We will continue to evaluate both the positive and negative evidence on a quarterly basis in determining the need for a valuation allowance with respect to our deferred tax assets. The accounting for deferred tax assets is based upon estimates of future results. Changes in positive and negative evidence, including differences between estimated and actual results, could result in changes in the valuation of our deferred tax assets that could have a material impact on our consolidated financial statements. Changes in existing federal and state tax laws and corporate income tax rates could also affect actual tax results and the realization of deferred tax assets over time.