Annual report [Section 13 and 15(d), not S-K Item 405]

Income Taxes

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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income from continuing operations before (benefit) provision for income taxes consisted of the following (in thousands):
Years Ended December 31,
2024 2023 2022
United States $ (14,396) $ (39,708) $ 143,815 
Foreign 1,368  (693) (1,786)
$ (13,028) $ (40,401) $ 142,029 
The (benefit) provision for income taxes consisted of the following (in thousands):
Years Ended December 31,
2024 2023 2022
Federal:
Current $ 138  $ (220) $ 34,968 
Deferred (84) (5,342) (4,973)
54  (5,562) 29,995 
State:
Current 595  277  8,857 
Deferred (1,331) (1,087) (1,100)
(736) (810) 7,757 
Foreign:
Current —  —  — 
Deferred 16  6  52 
16  6  52 
$ (666) $ (6,366) $ 37,804 
Significant components of the Company’s deferred tax assets, net consisted of the following (in thousands):
December 31,
2024 2023
Deferred Tax Assets:    
Accrued expenses and bonuses $ 3,984  $ 3,201 
Advances and loans and other reserves 16,611  12,612 
Deferred compensation and commissions 12,088  17,764 
Operating lease liabilities 22,834  23,359 
Stock-based compensation 7,682  7,106 
Net operating and capital loss carryforwards 11,341  13,664 
Other comprehensive income 306  580 
Amortizable intangibles and other 4,526  2,687 
Deferred tax assets before valuation allowance 79,372  80,973 
Valuation allowance (4,959) (5,296)
Deferred Tax Assets 74,413  75,677 
Deferred Tax Liabilities:    
Property and equipment (2,744) (4,366)
Operating lease ROU assets, net (19,236) (20,781)
Prepaid expenses (895) (841)
State taxes (1,535) (1,385)
Goodwill and other (1,923) (1,374)
Deferred Tax Liabilities (26,333) (28,747)
Deferred Tax Assets, Net $ 48,080  $ 46,930 
As of December 31, 2024, the Company had $31.4 million ($6.6 million tax effected) of net operating loss carryforwards, which are available to reduce future federal income taxes, and have no expiration date. Under the Coronavirus Aid Relief and Economic Security Act (CARES Act) and Tax Cuts and Jobs Act (2017 Tax Act), federal net operating losses incurred after December 31,2017 carried forward indefinitely and can offset up to 80% of future taxable income for tax years after December 31, 2020. State net operating loss carryforwards of $27.0 million ($1.8 million tax effected) are also available to reduce future state income taxes and will expire between 2034 and 2044. As of December 31, 2024, the Company had Canadian net operating loss carryforwards of approximately $8.6 million ($2.9 million tax effected), principally all of which will begin to expire in 2035.
A valuation allowance is required when it is more-likely-than not that all or a portion of a deferred tax asset will not be realized. Realization of a deferred tax asset is dependent upon taxable income in prior carryback years as appropriate, depending on jurisdiction, estimates of future taxable income, tax planning strategies and reversals of existing taxable temporary differences. The Company determined that as of December 31, 2024 and 2023, $5.0 million and $5.3 million, respectively, of the deferred tax assets related to Canadian losses do not satisfy the recognition criteria. The Company has therefore recorded a valuation allowance for this amount. The valuation allowance for deferred tax assets decreased by $337,000 during 2024 and increased by $361,000 and $337,000 during 2023 and 2022, respectively. The changes are primarily related to the Company’s Canadian operations.
The (benefit) provision for income taxes differs from the amount computed by applying the U.S. federal statutory rate to income before provision for income taxes and consisted of the following (dollars in thousands):
Years Ended December 31,
2024 2023 2022
Amount Rate Amount Rate Amount Rate
Income tax (benefit) expense at the federal statutory rate $ (2,736) 21.0  % $ (8,484) 21.0  % $ 29,826  21.0  %
State income tax (benefit) expense, net of federal benefit (582) 4.5  % (602) 1.5  % 6,127  4.3  %
Shortfall (windfall) tax benefits, net related to stock-based compensation 1,014  (7.8) % 1,260  (3.1) % (2,714) (1.9) %
Change in valuation allowance (337) 2.6  % 388  (0.9) % 337  0.2  %
Permanent and other items (1)
1,975  (15.2) % 1,072  (2.7) % 4,228  3.0  %
(Benefit) provision for income taxes $ (666) 5.1  % $ (6,366) 15.8  % $ 37,804  26.6  %
(1)Permanent items relate principally to compensation charges (6.8% – 2024), meals and entertainment (5.5% – 2024), qualified transportation fringe benefits, and other items.
There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2024, and 2023. At the beginning of the year ended December 31, 2022, the Company had $304,000 of unrecognized tax benefits, which was decreased by $304,000, as a result of positions taken in prior periods.
The Company is subject to tax in various jurisdictions and, as a matter of ordinary course, the Company may be subject to income tax examinations by the federal, state and foreign taxing authorities for the tax years 2020 to 2024. The Company is not currently under income tax examination by any taxing authority, and the income tax examination by the state of Illinois was closed without any assessment.
The Company has not provided for U.S. taxes on unremitted earnings of its foreign subsidiary as this subsidiary is operating at a loss and has no earnings and profits to remit. As a result, deferred taxes were not provided related to the cumulative translation adjustments.