Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes

Income Taxes

6.    Income Taxes

On March 18, 2020, the Families First Coronavirus Response Act ("FFCR Act"), and on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") were each enacted in response to the COVID-19 pandemic. The FFCR Act and the CARES Act contain numerous tax provisions, such as deferring payroll payments, establishing a credit for the retention of certain employees, relaxing limitations on the deductibility of interest, and updating the definition of qualified improvement property. This legislation currently has no material impact to the Company’s financial statements.

An income tax expense of $4,260,000 was recorded for the year ended December 31, 2021 compared to income tax expense of $705,000 for the year ended December 31, 2020. The effective tax rate was approximately 27.6% for the year ended December 31, 2021 compared to (58.4)% for the year ended December 31, 2020. The 2020 year to date tax rate was impacted by permanent differences primarily relating to executive compensation resulting in additional tax expense of approximately $1.0 million offset by the broadcast license impairment charge which was a discrete item and contributed approximately $1.4 million of tax benefit for the year ended December 31, 2020.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax liabilities and assets are as follows:

	December 31,
	2021		2020
	(In thousands)
Deferred tax liabilities:
Property and equipment	$	4,242	$	4,802
Intangible assets		21,425		20,442
Prepaid expenses		405		426
Total deferred tax liabilities		26,072		25,670
Deferred tax assets:
Allowance for doubtful accounts		43		89
Compensation		1,093		824
Other accrued liabilities		134		150
		1,270		1,063
Less: valuation allowance		—		—
Total net deferred tax assets		1,270		1,063
Net deferred tax liabilities	$	24,802	$	24,607
Current portion of deferred tax assets	$	361	$	150
Non-current portion of deferred tax liabilities		(25,163)		(24,757)
Net deferred tax liabilities	$	(24,802)	$	(24,607)

Deferred tax assets are required to be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. At December 31, 2021 and December 31, 2020, we do not have a valuation allowance for net deferred tax assets.

At December 31, 2021 and 2020, net deferred tax liabilities include a deferred tax asset of $1,270,000 and $1,063,000, respectively, relating to deferred compensation, stock-based compensation expense, accrued compensation, the allowance for doubtful accounts, and other accrued expenses.

The significant components of the provision for income taxes are as follows:

	Years Ended December 31,
	2021		2020		2019
	(In thousands)
Current:
Federal	$	3,080	$	850	$	2,900
State		985		400		1,100
Total current		4,065		1,250		4,000
Total deferred		195		(545)		1,420
Total Income Tax Provision	$	4,260	$	705	$	5,420

The reconciliation of income tax at the U.S. federal statutory tax rates to income tax expense (benefit) is as follows:

	Years Ended December 31,
	2021		2020		2019
	(In thousands)
Tax expense (benefit) at U.S. statutory rates	$	3,209	$	(290)	$	3,976
State tax expense, net of federal benefit		815		235		1,079
Other, net		236		760		365
	$	4,260	$	705	$	5,420

The 2021 and 2019 effective tax rates exceed the federal statutory rate primarily due to non-deductible compensation related expenses and state income taxes. The 2020 effective tax rate exceeded the federal statutory rate primarily due to non-deductible compensation related expenses, book tax differences in impairment charges and state income taxes.

The Company files income taxes in the U.S. federal jurisdiction, and in various state and local jurisdictions. The Company is no longer subject to U.S. federal examinations by the Internal Revenue Service (IRS) for years prior to 2018. During the first quarter of 2015, the IRS commenced an examination of the Company’s 2013 U.S. federal income tax return which was completed in the first quarter of 2016 and resulted in no changes to the return. The Company is subject to examination for income and non-income tax filings in various states.

As of December 31, 2021, and 2020, there were no accrued balances recorded related to uncertain tax positions.

We classify income tax-related interest and penalties that are related to income tax liabilities as a component of income tax expense. For the years ended December 31, 2021, 2020 and 2019, we had $0, $600, and $2,100, respectively, tax-related interest and penalties and had $0 accrued at December 31, 2021 and 2020.