Income Taxes Level 1 (Notes)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Income Taxes

The provision or benefit for income taxes includes U.S. federal income taxes (determined on a consolidated return basis), foreign income taxes, and state income taxes.

Income before income taxes was composed of the following components:

	Years Ended December 31,
	2021		2020		2019
	(In thousands)
United States	$	994,632	$	633,608	$	441,579
Foreign	50,868		28,452		22,853
	$	1,045,500	$	662,060	$	464,432

Income tax provision consisted of the following:

	Years Ended December 31,
	2021		2020		2019
	(In thousands)
Current:
United States	$	194,545	$	106,632	$	51,664
Foreign	14,088		7,968		7,059
State	39,452		23,439		12,908
Total current income taxes	248,085		138,039		71,631
Deferred:
United States	$	(3,543)	$	6,339	$	12,973
Foreign	(5,492)		(64)		(571)
State	3,198		1,609		10,628
Total deferred income taxes	(5,837)		7,884		23,030
Total income taxes	$	242,248	$	145,923	$	94,661

We made income tax payments of $270.2 million, $138.0 million, and $70.6 million in 2021, 2020, and 2019, respectively, and received refunds of $4.7 million, $5.2 million, and $4.7 million, respectively.

The differences between the U.S. federal statutory income tax rate and our effective tax rate were as follows:

	Years Ended December 31,
	2021			2020			2019
	(In thousands)
Computed tax provision at the applicable federal statutory income tax rate	$	219,555		$	139,031		$	97,531
State and local taxes, net of federal income tax benefits	35,045			20,711			20,081
Foreign jurisdiction differences	3,041			2,496			1,646
Permanent differences associated with divestitures	400			73			1,288
Changes in uncertain tax positions and audit settlements	51			100			(9,842)
Foreign valuation allowance, net of federal income tax benefits	(4,155)			(566)			43
Excess tax benefit from share-based compensation	(12,476)			(9,093)			(13,868)
Other	787			(6,829)			(2,218)
Provision for income taxes	$	242,248		$	145,923		$	94,661
Total consolidated effective tax rate	23.2		%	22.0		%	20.4		%

Deferred taxes are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates. The tax effects of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities consisted of the following:

	Years Ended December 31,
	2021		2020
	(In thousands)
Inventories and cemetery property	$	(205,660)	$	(208,707)
Deferred incremental direct selling costs	(90,691)		(81,301)
Property and equipment	(170,198)		(161,293)
Intangibles	(203,229)		(201,361)
Other	(3,728)		(2,424)
Deferred tax liabilities	(673,506)		(655,086)
Loss and tax credit carryforwards	148,069		134,912
Deferred revenue on preneed funeral and cemetery contracts	135,112		117,748
Accrued liabilities	79,333		73,743
Deferred tax assets	362,514		326,403
Less: valuation allowance	(120,739)		(108,090)
Net deferred income tax liability	$	(431,731)	$	(436,773)

Deferred tax assets and deferred income tax liabilities are recognized in our Consolidated Balance Sheet as follows:

	Years Ended December 31,
	2021		2020
	(In thousands)
Non-current deferred tax assets - included in Deferred charges and other assets, net	$	6,171	$	535
Non-current deferred tax liabilities - included in Deferred tax liability	(437,902)		(437,308)
Net deferred income tax liability	$	(431,731)	$	(436,773)

As of December 31, 2021, foreign withholding taxes have not been provided on the estimated $339.9 million of undistributed earnings and profits (E&P) of our foreign subsidiaries as we intend to permanently reinvest these foreign E&P in those businesses outside the U.S. However, if we were to repatriate such foreign E&P, the foreign withholding tax liability is estimated to be $16.4 million.

The following table summarizes the activity related to our gross unrecognized tax benefits from January 1, 2019 to December 31, 2021 (in thousands):

	Federal, State, and Foreign Tax
	(In thousands)
Balance at December 31, 2018	$	1,348
Reduction to tax positions related to prior years	—
Balance at December 31, 2019	$	1,348
Reductions to tax positions related to prior years	—
Balance at December 31, 2020	$	1,348
Reductions to tax positions related to prior years	—
Balance at December 31, 2021	$	1,348

Our total unrecognized tax benefits that, if recognized, would affect our effective tax rates were $1.3 million as of December 31, 2021, 2020 and 2019.

We include potential accrued interest and penalties related to unrecognized tax benefits within our income tax provision account. We have accrued $0.8 million, $0.7 million, and $0.6 million for the payment of interest, net of tax benefits, and penalties as of December 31, 2021, 2020 and 2019, respectively. We recorded an increase of interest and penalties of $0.1 million for each of the years ended December 31, 2021, 2020 and 2019, respectively. To the extent interest and penalties are not assessed with respect to uncertain tax positions or the uncertainty of deductions in the future, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision.

We file income tax returns, including tax returns for our subsidiaries, with federal, state, local, and foreign jurisdictions. We consider the United States to be our most significant jurisdiction; however, all tax returns are subject to routine compliance review by the taxing authorities in the jurisdictions in which we file tax returns in the ordinary course of business.

The federal statutes of limitations have expired for all tax years prior to 2018, and we are not currently under audit by the IRS. However, pursuant to the 2017 Tax Cuts and Jobs Act, the statute of limitations on the transition tax for the 2017 tax year does not expire until 2024. Various state jurisdictions are auditing years 2013 through 2020. There are currently no federal or provincial audits in Canada; however, years subsequent to 2015 remain open and could be subject to examination. We believe that it is reasonably possible that the recorded amount of gross unrecognized tax benefits may decrease by $1.3 million within the next twelve months as a result of concluding various state tax matters.

Various subsidiaries have federal, state, and foreign loss carryforwards in the aggregate of $2.7 billion with expiration dates through 2040. Such loss carryforwards will expire as follows:

	Federal		State		Foreign		Total
	(In thousands)
2022	$	—	$	76,127	$	—	$	76,127
2023	—		219,103		—		219,103
2024	—		160,530		415		160,945
2025	—		330,888		3,032		333,920
Thereafter	—		1,886,616		8,030		1,894,646
Total	$	—	$	2,673,264	$	11,477	$	2,684,741

In assessing the usefulness of deferred tax assets, we consider whether it is more likely than not that some portion or all of the net deferred tax assets will not be realized. The future realization of net deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. During 2021, we recorded a net $17.6 million increase in our state valuation allowance due to state legislative changes and a net $4.9 million decrease in our foreign valuation allowance resulting from increased income in Puerto Rico. The valuation allowances can be affected in future periods by changes to tax laws, changes to statutory tax rates, and changes in estimates of future taxable income.

At December 31, 2021, our loss and tax credit carryforward deferred tax assets and related valuation allowances by jurisdiction are as follows (presented net of federal benefit):

	Federal		State		Foreign		Total
			(In thousands)
Loss and tax credit carryforwards	$	—	$	141,551	$	6,518	$	148,069
Valuation allowance	$	—	$	105,635	$	15,104	$	120,739