Annual report pursuant to Section 13 and 15(d)

Income Taxes

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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, various states and Canada. With a few exceptions, the Company is no longer subject to U.S. federal, state and local, or Canadian examinations by tax authorities for years before 2016.

    The provision for income taxes by location of the taxing jurisdiction for the years ended December 31, 2023, 2022 and 2021 consisted of the following:

  2023 2022 2021
Current:
Federal $ 18,444  $ 43,327  $ 27,201 
State 4,285  12,026  7,186 
  22,729  55,353  34,387 
Deferred:
Federal (6,268) 6,317  209 
State (2,625) 1,369  1,212 
  (8,893) 7,686  1,421 
  $ 13,836  $ 63,039  $ 35,808 
A reconciliation of income taxes computed at the U.S. federal statutory income tax rate (21.0% for 2023, 2022 and 2021) to the provision for income taxes reflected in the Company’s Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021 is as follows:
  2023 2022 2021
Tax expense at the statutory rate $ 11,894  $ 50,915  $ 29,964 
State income taxes, net of federal income tax benefit 1,561  10,189  6,910 
Share-based compensation (537) (840) (933)
Other permanent differences (36) (30) 31 
Non-deductible compensation 1,190  1,435  293 
Change in income tax contingency reserves —  —  (260)
Federal income tax credits (34) (107) (76)
Other (202) 1,477  (121)
  $ 13,836  $ 63,039  $ 35,808 

    The significant components of the deferred tax assets and liabilities at December 31, 2023 and 2022 were as follows:
December 31,
2023		 December 31,
2022
Deferred tax assets:
Accrued expenses $ 12,006  $ 13,743 
Allowance for doubtful accounts 565  822 
Operating lease liabilities 29,658  37,599 
Due diligence and transaction costs 13,953  — 
Share-based compensation 4,995  4,458 
Accruals for income tax contingencies 129  141 
Capital loss carryforwards —  4,253 
Net operating loss carryforwards 634  645 
Total gross deferred tax assets 61,940  61,661 
Valuation allowance (395) (4,648)
Total net deferred tax assets 61,545  57,013 
Deferred tax liabilities:
Tax over book depreciation 33,373  32,888 
Prepaid expenses 10,807  6,600 
Operating lease right-of-use assets 28,559  36,600 
Goodwill 23,744  23,681 
Intangible assets 7,262  8,337 
Total deferred tax liabilities 103,745  108,106 
Net deferred tax liabilities $ (42,200) $ (51,093)

The Company paid income taxes, net of refunds, of $20,842, $65,388 and $35,766 for the years ended December 31, 2023, 2022 and 2021, respectively.
In 2021, the sale of Pool resulted in a capital loss in the amount of $4,253, which expires in 2026. A valuation allowance of $4,253 was recorded against the capital loss carryforward as of both December 31, 2022 and 2021. As of each reporting date, the Company considers new evidence, both positive and negative, that could affect the future realization of its deferred tax assets. As of December 31, 2023, the Company determined that there is sufficient evidence based on the capital gain realized from the sale of Final Mile to conclude that it is more likely than not that the capital loss carryforward of $4,253 is realizable. As a result, the Company realized a valuation allowance benefit in 2023, which was allocated to “Income from discontinued operations, net of tax.” Therefore, the change in the valuation allowance recorded against the capital loss carryforward for the years ended December 31 2023, 2022 and 2021 was ($4,253), $23 and $4,230, respectively.

As of December 31, 2023, 2022 and 2021 the Company had state net operating loss carryforwards of $13,240, $13,574 and $13,819, respectively, that expire between 2023 and 2034. The state net operating loss carryforwards are limited to the future taxable income of separate legal entities. The Company maintains a valuation allowance to reserve against its state net operating loss carryforwards of $395 as of both December 31, 2023 and 2022. There was no change in the valuation allowance for the state net operating loss carryforwards in 2023, 2022 and 2021. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company assessed the likelihood that its deferred tax assets would be recovered from estimated future taxable income and available tax planning strategies. In making this assessment, all available evidence was considered including economic climate, as well as reasonable tax planning strategies. The Company believes it is more likely than not that it will realize its remaining net deferred tax assets, net of the valuation allowance, in future years.     

A reconciliation of the beginning and ending amount of unrecognized tax benefits as of and during the years ended December 31, 2023 and 2022 is as follows:
Balance at December 31, 2021 $ 241 
Reductions for settlement with state taxing authorities (66)
Additions for tax positions of current year 23 
Balance at December 31, 2022 198 
Reductions for settlement with state taxing authorities (66)
Additions for tax positions of current year 21 
Balance at December 31, 2023 $ 153 
The Company recognizes income tax benefits from uncertain tax positions where the realization of the ultimate benefit is uncertain. As of December 31, 2023 and 2022, the Company had $153 and $198, respectively, of unrecognized income tax benefits, all of which would affect the Company’s effective tax rate if recognized. At December 31, 2023 and 2022, the Company had accrued interest and penalties related to unrecognized tax benefits of $82 and $85, respectively. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in “Interest expense, net” and “Other operating expenses”, respectively.