Note 6 - Income Taxes

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

6. Income Taxes

We recorded a $56.5 million deferred income taxes benefit in 2017 to recognize the impact on our federal net deferred tax liability of the reduction of the federal corporate statutory income tax rate from 35% to 21% related to the Tax Cuts and Jobs Act of 2017, which was enacted prior to December 31, 2017. Excluding that benefit, the 2017 federal deferred provision was $8.0 million and the effective tax rate was 40.1%. The Tax Cuts and Jobs Act of 2017 makes broad and complex changes to the U.S. tax code including, but not limited to, reducing the federal corporate income tax rate as noted above beginning on January 1, 2018 and allowing bonus depreciation with full expensing of qualified property placed in service after September 27, 2017.

The components of the income taxes expense (benefit) consisted of the following:

(In thousands)	2019			2018			2017
Current:
Federal	$	(1,210	)	$	7,575		$	12,427
State		1,782			3,076			990
Total current		572			10,651			13,417
Deferred:
Federal		15,572			5,815			(48,424	)
State		473			(464	)		1,196
Total deferred		16,045			5,351			(47,228	)
Total expense (benefit)	$	16,617		$	16,002		$	(33,811	)

The federal statutory income tax rate is reconciled to the effective income tax rate as follows:

	2019			2018			2017
Federal statutory income tax rate		21	%		21	%		35	%
Increase in taxes arising from state income taxes, net of federal income tax benefit		2			3			3
Per diem and other non-deductible expenses		1			2			4
Decrease in federal deferred taxes due to decrease in statutory rate		—			—			(100	)
Federal tax credits		(2	)		(2	)		(1	)
Other, net		(1	)		(1	)		(1	)
Effective tax rate		21	%		23	%		(60	)%

As of December 31, the net deferred tax liability consisted of the following:

(In thousands)	2019		2018
Deferred tax assets:
Reserves and accrued liabilities	$	9,050	$	7,986
Other		2,464		2,313
		11,514		10,299
Deferred tax liabilities:
Depreciation		130,686		113,773
Prepaid expenses		2,850		2,503
		133,536		116,276
Net deferred tax liability	$	122,022	$	105,977

We have not provided a valuation allowance against deferred tax assets at December 31, 2019 or 2018. We believe the deferred tax assets will be realized principally through future reversals of existing taxable temporary differences (deferred tax liabilities) and future taxable income.

Our reserves for unrecognized tax benefits were $3.0 million as of December 31, 2019 and $1.9 million as of December 31, 2018. The $1.1 million increase in the amount reserved in 2019 relates to current period tax positions and an amendment to prior periods’ open returns for a current position less the removal of the reserve relating to 2014 tax positions, as that period has now closed. The amount reserved as of December 31, 2018 was added in 2014 through 2018 relating to current period tax positions. If recognized, $2.9 million of the unrecognized tax benefits as of December 31, 2019 would favorably impact our effective tax rate. Potential interest and penalties related to unrecognized tax benefits of $13,000 and $12,000 were recognized in our financial statements as of December 31, 2019 and 2018, respectively. The federal statute of limitations remains open for 2016 and forward. We file tax returns in numerous state jurisdictions with varying statutes of limitations.