Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

5. Income Taxes

The income tax provision consists of the following:

Year ended December 31,	2022		2021
Current Expense
Federal	$	6,498	$	27,084
State		541		4,382
Total Current Expense		7,039		31,466
Deferred Expense (Benefit)
Federal		6,910		(5,405	)
State		1,044		(640	)
Total Deferred Expense (Benefit)		7,954		(6,045	)
Income Tax Expense	$	14,993	$	25,421

The following is a reconciliation between a federal income tax rate of 21% and the effective tax rate which is derived by dividing the provision for income taxes by the income before the provision for income taxes:

Year ended December 31,	2022			2021
Computed provision for income taxes at the statutory rate	$	11,362		$	24,790
Increase (decrease) in income taxes resulting from:
State income tax provision, net of federal income tax benefit		1,189			2,757
Non-deductible expenses		60			52
Tax exempt income		—			(2,100	)
Valuation allowance changes affecting the provision for income taxes		2,375			—
Return to provision adjustments		9			—
Other, net		(2	)		(78	)
Provision for income taxes	$	14,993		$	25,421

As of December 31, 2022 and December 31, 2021, the Company’s deferred tax assets were primarily the result of deferred revenues which have previously been included in taxable income and accruals and reserves that have not yet been deducted in determining taxable income. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of December 31, 2022 and December 31, 2021, the Company achieved three years of cumulative pretax ordinary income. In addition, the projection of taxable income in future periods led management to believe that there is sufficient positive evidence to conclude that it is more likely than not that deferred tax assets that are ordinary in nature are realizable. Therefore, no valuation allowance is necessary as of December 31, 2022 with respect to deferred tax assets that are ordinary in nature.

For the year ended December 31, 2022, the Company recorded a valuation allowance of $2,375 against deferred tax assets that are capital in nature and consist of an unrealized loss on investments. As of December 31, 2022, the Company sustained three years of cumulative pretax capital losses. In addition, management considered other positive and negative evidence when assessing whether a valuation allowance was necessary against deferred tax assets that were capital in nature. The negative evidence outweighed positive evidence, leading management to conclude that a valuation allowance was necessary as of December 31, 2022.

Deferred tax assets and liabilities reflect temporary differences between financial and tax reporting. Significant components of deferred tax assets and liabilities are as follows:

December 31,	2022			2021
Deferred Tax Assets
Accruals and reserves not currently deductible	$	5,294		$	5,647
State NOL carryovers		70			21
Accrued and deferred compensation		1,987			2,562
Prepaid items		111			891
Lease liability		694			1,033
Contract liability		283			1,215
Deferred revenues		4,094			11,328
Unrealized loss on investments		2,375			276
Other		1,240			1,266
Subtotal before valuation allowance		16,148			24,239
Less: valuation allowance		(2,375	)		—
Total Deferred Tax Assets		13,773			24,239
Deferred Tax Liabilities
Property and equipment		(20,475	)		(22,607	)
Right-of-use asset		(1,282	)		(1,663	)
Other		(6	)		(124	)
Total Deferred Tax Liabilities		(21,763	)		(24,394	)
Net Deferred Income Tax Liabilities	$	(7,990	)	$	(155	)

At December 31, 2022 and December 31, 2021, the Company had no federal net operating losses, and state net operating losses of approximately $1,280 and $731, respectively. As of December 31, 2022, the estimated effective tax rate applicable to the federal and state net operating losses is 21.0% and 5.5%, respectively. Federal net operating losses are not subject to an expiration date but are subject to an 80% of taxable income limitation after 2020, while the Company expects the state net operating losses to begin to expire in 2040. State net operating losses differ with respect to expiration dates and limitations dependent on state specific regulations. The Company has no ongoing federal or state examinations. Federal tax years 2019, 2020, and 2021 are open to examination.

Under ASC Topic 740, the accounting guidance related to uncertain tax positions requires that the impact of a tax position be recognized in the financial statements if that position is more likely than not of being sustained on audit, based on the technical merits of the position. A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2022 and December 31, 2021 is as follows:

December 31,	2022		2021
Unrecognized tax benefits at the beginning of the year	$	118	$	177
Gross increases – current year tax provisions		5		—
Gross decreases – lapse of statute		—		(59	)
Unrecognized tax benefits at the end of the year	$	123	$	118
Interest and penalties in year-end balance	$	62	$	57