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Income Taxes
12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block] Income Taxes
The Company records income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and attributable to operating loss and tax credit carryforwards, if any. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which the temporary differences are expected to be recovered or paid.
During the fourth quarter of 2019, former President Trump signed into law the Taxpayer Certainty and Disaster Relief Act of 2019 (“Tax Extenders Act”), which temporarily renewed approximately two dozen credits that previously expired or were set to expire at the end of 2019. Notable for the Company was the retroactive extension of the energy efficient homes credit for 2018 through 2020. As a result, the Company recognized a $7.2 million tax benefit for the year ended December 31, 2020.

In accordance with ASC 740, we evaluate our deferred tax assets, including the benefit from NOLs and tax credit carryforwards, if any, to determine if a valuation allowance is required. Companies must assess, using significant judgments, whether a valuation allowance should be established based on the consideration of all available evidence using a “more likely than not” standard with significant weight being given to evidence that can be objectively verified. This assessment gives appropriate consideration to all positive and negative evidence related to the realization of the deferred tax assets and considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the length of statutory carryforward periods, our experience with operating losses and our experience of utilizing tax credit carryforwards and tax planning alternatives. Based upon a review of all available evidence, we believe our deferred tax assets were fully realizable in all periods presented.
At December 31, 2020, the Company’s total deferred tax assets were $29.3 million which is offset by $23.1 million of total deferred tax liabilities for a $6.2 million net deferred tax asset which is reported on the Company’s Consolidated Balance Sheets.
The tax effects of the significant temporary differences that comprise the deferred tax assets and liabilities are as follows:
 December 31,
(In thousands)20202019
Deferred tax assets:  
Warranty, insurance and other accruals$8,931 $8,114 
Equity-based compensation1,537 2,109 
Inventory5,344 4,254 
Operating lease liabilities13,145 4,613 
State taxes273 213 
Net operating loss carryforward65 754 
Deferred charges 426 
Total deferred tax assets$29,295 $20,483 
Deferred tax liabilities: 
Federal effect of state deferred taxes$230 $476 
Depreciation7,794 5,288 
Operating lease right-of-use assets13,099 4,613 
Prepaid expenses1,304 475 
Deferred charges685 — 
Total deferred tax liabilities$23,112 $10,852 
Net deferred tax asset$6,183 $9,631 
The provision from income taxes consists of the following:
 Year Ended December 31,
(In thousands)202020192018
Current:
Federal$54,634 $29,602 $24,408 
State12,087 4,985 $4,261 
$66,721 $34,587 $28,669 
 Year Ended December 31,
(In thousands)202020192018
Deferred:
Federal$2,520 $1,490 $2,333 
State928 2,361 2,624 
$3,448 $3,851 $4,957 
Total$70,169 $38,438 $33,626 
For 2020, 2019 and 2018, the Company’s effective tax rate was 22.63%, 23.15%, and 23.80%, respectively. The decrease in 2020’s effective tax rate from 2019 was primarily attributable to an increased tax benefit from energy tax credits. The decrease in 2019’s effective tax rate from 2018 was primarily attributable to an increased tax benefit from equity compensation. Reconciliation of the differences between income taxes computed at the federal statutory tax rate and consolidated benefit from income taxes are as follows:
 Year Ended December 31,
(In thousands)202020192018
Federal taxes at statutory rate$65,109 $34,865 $29,671 
State and local taxes – net of federal tax benefit10,761 5,981 5,636 
Equity Compensation(1,322)(1,251)(254)
Federal tax credits(7,182)(3,493)(2,817)
Other2,803 2,336 1,390 
Total$70,169 $38,438 $33,626 
The Company files income tax returns in the U.S. federal jurisdiction, and various states.  The Company is no longer subject to U.S. federal, state or local examinations by tax authorities for years before 2015.  The Company is audited from time to time, and if any adjustments are made, they would be either immaterial or reserved.
The Company recognizes interest and penalties accrued related to unrecognized tax benefits in tax expense.  At December 31, 2020, 2019 and 2018, we had no unrecognized tax benefits due to the lapse of the statute of limitations and completion of audits in prior years. We believe that our current income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change.
The Company had $0.1 million of state NOL carryforwards, net of the federal benefit, at December 31, 2020. Our state NOLs may be carried forward from one to 15 years, depending on the tax jurisdiction, with $0.1 million expiring between 2028 and 2032, absent sufficient state taxable income.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. The CARES Act includes several significant business tax provisions including modifications for net operating losses, credit for prior-year minimum tax liability and limitations on business interest and charitable contributions. The CARES Act also provides for an employee retention credit and technical corrections regarding qualified improvement property. We assessed the tax impact of the CARES Act as it relates to the Company, and it did not have a material impact on our tax rate for 2020.