INCOME TAXES

12 Months Ended

Dec. 31, 2019

Income taxes attributable to continuing operations consist of the following (amounts in millions):



	For the Years Ended December 31,
	2019		2018		2017
Current income tax expense/(benefit):
Federal	$	24.2	$	16.4	$	(2.0	)
State and local	4.8		2.1		(0.1		)
	29.0		18.5		(2.1		)
Deferred income tax expense/(benefit):
Federal	9.5		14.5		51.2
State and local	4.0		5.8		1.0
	13.5		20.3		52.2
Income tax expense	$	42.5	$	38.8	$	50.1

Total income tax expense for the years ended December 31, 2019, 2018 and 2017 was allocated as follows (amounts in millions):



	For the Years Ended December 31,
	2019		2018		2017
Income from continuing operations	$	42.5	$	38.8	$	50.1
Interest expense	0.3		0.1		—
Stockholders’ equity	—		—		(0.3		)
Goodwill	0.9		—		—
	$	43.7	$	38.9	$	49.8

A reconciliation of significant differences between the reported amount of income tax expense and the expected amount of income tax expense that would result from applying the U.S. federal statutory income tax rate of 21% in 2019 and 2018 and 35% in 2017 to income before taxes is as follows:



	For the Years Ended December 31,
	2019		2018		2017
Income tax expense at U.S. federal statutory rate (1)	21.0	%	21.0	%	35.0	%
State and local income taxes, net of federal income tax benefit	4.8		4.8		3.8
Excess tax benefits from share-based compensation	(1.9	)	(1.6	)	(3.5	)
Tax rate change (2)	—		—		26.5
Other items, net (3)	1.0		0.2		0.2
Income tax expense	24.9	%	24.4	%	62.0	%


(1)	On December 22, 2017, H.R. 1, originally known as the Tax Cuts and Jobs Act was enacted, which eliminated the progressive U.S. federal corporate tax rate structure with a maximum corporate tax rate of 35% and replaced it with a flat tax rate of 21%, effective January 1, 2018.

(2)

According to Accounting Standard Codification ("ASC") 740, Income Taxes, deferred tax assets and liabilities are remeasured to reflect the effects of enacted changes in tax rates at the date of enactment, even though the tax rate changes are not effective until a future period. The Company's remeasurement of its deferred tax assets and liabilities to reflect the enacted reduced tax rate, pursuant to the Tax Cuts and Jobs Act, resulted in a $21.4 million deferred income tax expense during 2017.


(3)	Includes various items such as non-deductible expenses, non-taxable income, tax credits, valuation allowance, uncertain tax positions and return-to-accrual adjustments.

As of December 31, 2019 and 2018, the Company had income taxes receivable of $2.0 million and $1.6 million, respectively, included in other current assets within our consolidated balance sheets.

Deferred tax assets (liabilities) consist of the following components (amounts in millions):



	As of December 31,
	2019			2018
Deferred tax assets:
Allowance for doubtful accounts	$	—		$	5.6
Accrued payroll & employee benefits	15.1			11.2
Workers’ compensation	9.0			8.3
Amortization of intangible assets	—			14.7
Share-based compensation	7.9			6.9
Compliance matters	4.8			2.2
Net operating loss carryforwards	3.7			5.9
Tax credit carryforwards	3.1			2.8
Other	0.8			0.7
Gross deferred tax assets	44.4			58.3
Less: valuation allowance	(0.4		)	(0.7		)
Net deferred tax assets	44.0			57.6
Deferred tax liabilities:
Property and equipment	(4.3		)	(4.4		)
Amortization of intangible assets	(0.3		)	—
Deferred revenue	(13.5		)	(13.5		)
Investment in partnerships	(3.3		)	(3.1		)
Other liabilities	(1.2		)	(0.8		)
Gross deferred tax liabilities	(22.6		)	(21.8		)
Net deferred tax assets (liabilities)	$	21.4		$	35.8

The Company utilized its remaining U.S. federal net operating loss ("NOL") carryforwards, research and development tax credits and employment tax credits in 2018; however, as of December 31, 2019, the Company has $0.1 million of federal NOL carryforwards acquired from the acquisition of CCH.

As of December 31, 2019, we have state NOL carryforwards of $73.9 million that are available to reduce future taxable income and $3.9 million of various state tax credits available to reduce future state income taxes. The state NOL and tax credit carryforwards expire at various times.

As of December 31, 2019 and 2018, the valuation allowance for deferred tax assets, which is primarily related to certain state NOLs and state tax credit carryforwards, was $0.4 million and $0.7 million, respectively. The net change in the total valuation allowance for the year ended December 31, 2019 was a decrease of $0.3 million; there was no change in the total valuation allowance for the year ended December 31, 2018.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those jurisdictions during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax-planning strategies in making this assessment. In order to fully realize the deferred tax assets, the Company will need to generate future taxable income before the expiration of the carryforwards governed by the tax code. Based on the current level of pretax earnings, the Company will generate the minimum amount of future taxable income needed to support the realization of the deferred tax assets. As a result, as of December 31, 2019, management believes that it is more likely than not that we will realize the benefits of these deferred tax assets, net of the existing valuation allowances. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

Uncertain Tax Positions

We account for uncertain tax positions in accordance with the authoritative guidance for uncertain tax positions. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (amounts in millions):



	For the Years Ended December 31,
	2019		2018		2017
Balance at beginning of period	$	2.7	$	2.7	$	4.1
Additions for tax positions related to current year	—		—		—
Additions for tax positions related to prior year	—		—		—
Reductions for tax positions related to prior years	—		—		—
Lapse of statute of limitations	—		—		(0.3		)
Change in statutory tax rate (1)	—		—		(1.1		)
Settlements	—		—		—
Balance at end of period	$	2.7	$	2.7	$	2.7


(1)	The Company's remeasurement of its deferred tax assets and liabilities to reflect the enacted reduced tax rate as a result of the Tax Cuts and Jobs Act resulted in a $1.1 million reduction in its uncertain tax positions recorded in net deferred tax assets at December 31, 2017.

As of December 31, 2019 and 2018, there is $2.7 million of unrecognized tax benefits recorded in other long-term obligations within the consolidated balance sheet that, if recognized in future periods, would impact our effective tax rate.

We recognized $0.3 million and $0.1 million of interest as components of interest expense in connection with our reserve for uncertain tax positions during the years ended December 31, 2019 and 2018, respectively; we recognized a benefit of less than $0.1 million of interest as a component of interest expense in connection with our reserve for uncertain tax positions during the year ended December 31, 2017. Interest related to uncertain tax positions included in the consolidated balance sheet at December 31, 2019 and 2018 was $0.4 million and $0.1 million, respectively.

We are subject to income taxes in the U.S. and in many individual states, with significant operations in Louisiana, South Carolina, Alabama, Georgia, Massachusetts and Tennessee. We are open to examination in the U.S. and in various individual states for tax years ended December 31, 2014 through December 31, 2019. We are also open to examination in various states for the years ended 2004 – 2019 resulting from net operating losses generated and available for carryforward from those years.