INCOME TAX

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

INCOME TAX

INCOME TAX

Income tax provision (benefit) on income from operations consists of the following:

	Years Ended December 31,
	2023		2022		2021
Current:
Federal	$	86,218	$	84,570	$	7,591
State	19,803		25,975		3,203
	106,021		110,545		10,794
Deferred	(73,704)		(87,192)		(13,271)
	$	32,317	$	23,353	$	(2,477)

Reconciliation of the U.S. statutory income tax rate to our effective income tax expense rate for operations follows:

	Years Ended December 31,
	2023		2022		2021
Federal income tax expense at statutory rate	$	41,630	$	39,395	$	33,386
State income tax, net of federal income tax benefit	6,881		9,197		5,594
Net operating loss carryback	—		(261)		3,391
Excess tax benefits of share-based compensation	(9,325)		(7,752)		(47,675)
Tax credits	(20,494)		(31,334)		(4,999)
Non-deductible business expenses	5,191		5,425		7,542
Uncertain tax positions	7,647		8,338		(425)
Other, net	787		345		709
	$	32,317	$	23,353	$	(2,477)

The tax effects of the major items recorded as deferred tax assets and liabilities as of December 31 are:

	2023		2022
Deferred income tax assets:
Capitalized research and experimental expenditures	$	130,972	$	76,731
Operating expenses not currently deductible	22,180		17,263
Stock option and other employee benefit plans	21,864		21,373
Loss and credit carryforwards	7,430		8,589
Deferred revenue	1,923		4,405
Other	111		289
Total deferred income tax assets	184,480		128,650
Valuation allowance	—		—
Total deferred income tax assets, net of valuation allowance	184,480		128,650
Deferred income tax liabilities:
Intangible assets	(242,522)		(256,818)
Property and equipment	(8,659)		(11,220)
Prepaid expenses	(11,889)		(9,503)
Total deferred income tax liabilities	(263,070)		(277,541)
Net deferred income tax liabilities	$	(78,590)	$	(148,891)

As of December 31, 2023, the capitalization and amortization requirements of research and experimental expenditures pursuant to the TCJA changes to Internal Revenue Code Section 174 resulted in a deferred tax asset of $131.0 million.

As of December 31, 2023, we had after-tax federal and state net operating loss and net tax credit carryforwards of $7.4 million, that will begin expiring in 2033, if not utilized.

The acquired carryforwards are subject to an annual limitation but are expected to be realized. We believe it is more likely than not that all other deferred tax assets will be realized. However, the amount of the deferred tax asset considered realizable could be adjusted in the future if estimates of reversing taxable temporary differences are revised.

The following table provides a reconciliation of the gross unrecognized tax benefits from uncertain tax positions for the years ended December 31:

	2023		2022
Balance at beginning of period	$	14,044	$	4,400
Additions for tax positions of prior period	3,087		5,103
Reductions for tax positions of prior period	(338)		(169)
Additions for tax positions of current period	4,838		5,724
Settlements	—		—
Expiration of statutes of limitations	(762)		(1,014)
Balance at end of period	$	20,869	$	14,044

We recognize interest and penalties related to uncertain tax positions as a component of income tax expense in the consolidated statements of income. As of December 31, 2023 and December 31, 2022, we had uncertain tax positions of $22.1 million and $14.6 million, including interest and penalties, respectively, recorded within deferred tax liabilities, other long-term assets, and other long-term liabilities in our consolidated balance sheets. The total amount of unrecognized tax benefits, net of the federal income tax benefit of state taxes, if recognized, that would affect the effective tax rate is $20.1 million as of December 31, 2023, and $13.3 million and $4.0 million as of December 31, 2022, and 2021, respectively. It is reasonably possible that events will occur during the next 12 months that would cause the total amount of unrecognized tax benefits to increase or decrease. However, we do not expect such increases or decreases to be material to the financial condition or results of operations.

We are subject to U.S. federal income tax, as well as income tax of multiple state, local and foreign jurisdictions. We are routinely subject to income tax examinations by these taxing jurisdictions, but we do not have a history of, nor do we expect any material adjustments as a result of these examinations. With few exceptions, major U.S. federal, state, local and foreign jurisdictions are no longer subject to examination for years before 2019. As of February 21, 2024, no significant adjustments have been proposed by any taxing jurisdiction.