Income Taxes
The components of the provision for income taxes consist of the following.
| | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | 2022 |
| Current: | | | | | |
| Federal | $ | 2,702 | | | $ | 2,197 | | | $ | 1,935 | |
| State | 1,392 | | | 544 | | | 2,925 | |
| Deferred | (8,489) | | | 6,567 | | | (15,582) | |
| Income tax expense (benefit) | $ | (4,395) | | | $ | 9,308 | | | $ | (10,722) | |
| | | | | |
| Reconciliation of effective income tax: | | | | | |
| Tax at U.S. statutory rates | $ | (1,711) | | | $ | 13,618 | | | $ | (9,036) | |
| State income taxes, net of federal benefit | (2,485) | | | 1,572 | | | (555) | |
| Federal income tax credits | (144) | | | (1,309) | | | (106) | |
| Dividends received deduction | (910) | | | (1,169) | | | (1,183) | |
| Valuation allowance | 788 | | | 709 | | | 614 | |
| 162(m) compensation limitation | 91 | | | 1,506 | | | — | |
| Foreign tax rate differences | (118) | | | (97) | | | (124) | |
| Abraxas tax attributes | — | | | (5,660) | | | — | |
| Other | 94 | | | 138 | | | (332) | |
| Income tax expense (benefit) | $ | (4,395) | | | $ | 9,308 | | | $ | (10,722) | |
The Company did not have a net tax expense or benefit on income from international operations. Losses before income taxes derived from domestic operations during 2024 were $4,955, earnings before income taxes derived from domestic operations during 2023 were $67,736, and losses before income taxes derived from domestic operations during 2022 were $40,624. Losses before income taxes derived from international operations during 2024, 2023, and 2022 were $3,199, $2,889, and $2,403, respectively.
During 2023, the Company recognized tax benefits associated with the tax attributes of Abraxas Petroleum’s oil and gas properties.
As of December 31, 2024, we had $506 of unrecognized tax benefits, including $91 of interest and penalties, which are included in other long-term liabilities in the consolidated balance sheet. As of December 31, 2023, we had $348 of unrecognized tax benefits, including $48 of interest and penalties, which is included in other long-term liabilities in the consolidated balance sheet. Our continuing practice is to recognize interest expense and penalties related to income tax matters in income tax expense. The unrecognized tax benefits of $506 would impact the effective income tax rate if recognized. Adjustments to the Company’s unrecognized tax benefit for gross increases for the current period tax position, gross decreases for prior period tax positions, and the lapse of statutes of limitations during 2024, 2023, and 2022 were not significant.
We file income tax returns which are periodically audited by various foreign, federal, state, and local jurisdictions. With few exceptions, we are no longer subject to federal, state, and local tax examinations for fiscal years prior to 2021. We believe we have certain state income tax exposures related to fiscal years 2020 through 2024.
Deferred tax assets and liabilities are determined based on differences between financial reporting and the tax basis of assets and liabilities and are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse.
Our deferred tax assets and liabilities consist of the following.
| | | | | | | | | | | |
| December 31, |
| 2024 | | 2023 |
| Deferred tax assets: | | | |
| Insurance reserves | $ | 1,572 | | | $ | 1,734 | |
| Compensation accruals | 308 | | | 653 | |
| Gift card accruals | 214 | | | 749 | |
| Net operating loss credit carryforward | 20,898 | | | 19,840 | |
| Valuation allowance on net operating losses | (15,477) | | | (14,643) | |
| Deferred income | 272 | | | 351 | |
| Bad debt reserve | 743 | | | 667 | |
| Other | 1,393 | | | 313 | |
| Total deferred tax assets | 9,923 | | | 9,664 | |
| | | |
| Deferred tax liabilities: | | | |
| Investment partnerships | 17,255 | | | 27,896 | |
| Investments | 557 | | | 288 | |
| Goodwill and intangibles | 19,068 | | | 16,350 | |
| Fixed assets and depletable assets basis difference | 2,436 | | | 3,069 | |
| Total deferred tax liabilities | 39,316 | | | 47,603 | |
| Net deferred tax liability | $ | (29,393) | | | $ | (37,939) | |
Accounts payable and accrued expenses include income taxes receivable of $613 as of December 31, 2024, and income taxes payable of $980 as of December 31, 2023.