|12 Months Ended|
Dec. 31, 2020
|Income Tax Disclosure [Abstract]|
Note 11 — Income Taxes
In accordance with the provisions of ASC 740, the Company periodically reviews its income tax positions based on tax laws and regulations and financial reporting considerations, and records adjustments as appropriate. This review takes into consideration the status of current taxing authorities’ examinations of the Company’s tax returns, recent positions taken by the taxing authorities on similar transactions, if any, and the overall tax environment.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
The total amount of unrecognized tax benefits that would affect our effective tax rate if recognized was $0, $73,000 and $202,000 as of December 31, 2020, 2019 and 2018, respectively.
For the year ended December 31, 2020, unrecognized tax benefits decreased by $73,000 related to the filing of state income tax returns for open tax years in jurisdictions in which the Company had nexus. For the year ended December 31, 2019, unrecognized tax benefits decreased by $129,000 related to state taxes, primarily in connection with the settlement of the California Franchise Tax Board 2008 and 2009 examinations. For the year ended December 31, 2018, unrecognized tax benefits decreased by $837,000 in connection with California Enterprise Zone interest deductions as result of the lapse of the statute of limitations.
The Company does not have any open uncertain tax positions as of December 31, 2020. We account for potential interest and penalties related to uncertain tax positions as part of our provision for federal and state income taxes. Accrued interest and penalties are included within accrued expenses and other liabilities on the Consolidated Balance Sheets.
As of December 31, 2020, the Company is subject to examination by various taxing authorities for its federal tax returns for the for the years ending December 31, 2017 through 2019 and state tax returns for the years ending December 31, 2016 through 2019.
A summary of the provision for income taxes was as follows:
Deferred tax assets and liabilities were as follows:
As of each reporting date, management considers the realizability of deferred tax assets based on management’s judgment of various future events and uncertainties, including the timing and amount of future income, as well as the implementation of various tax planning strategies to maximize realization of deferred tax assets. A valuation allowance is provided when it is more likely than not that some portion of deferred tax assets will not be realized. As of December 31, 2020, management determined that a valuation allowance of $4.4 million was appropriate against certain state net operating losses and certain state tax credits. For all other deferred tax assets, management believes it was more likely than not that these deferred tax assets will be realized principally through future taxable income and reversal of existing taxable temporary differences. As of December 31, 2019, management determined a valuation allowance of $4.9 million was appropriate against certain state net operating losses and certain state tax credits.
As of December 31, 2020, the Company had net operating loss carryforwards of $14.8 million and $214.8 million for federal and state income tax purposes, respectively. The federal net operating loss carryforwards of $14.8 million expire at various dates from 2034 to 2035. The state net operating loss carryforwards include California of $152.3 million which expire at various dates from 2031 through 2035, and Illinois of $62.5 million which expire at various dates from 2024 to 2025. As of December 31, 2020, the Company had zero state low income housing tax credit carryforwards.
Reconciliation between the federal statutory income tax rate and the effective tax rates is shown in the following table:
The CARES Act includes provisions for tax payment relief, significant business incentives, and certain corrections to the 2017 Tax Cuts and Jobs Act. The tax relief measures for entities includes anet operating loss carry back, increases in interest expense deduction limits, accelerates alternative minimum tax credit refunds, provides payroll tax relief, and provides a technical correct to allow accelerated deductions for qualified improvement property. ASC Topic 740, Income Taxes, requires the effect of changes in tax law be recognized in the period in which new legislation is enacted. The enactment of the CARES Act was not material to the Company’s income taxes for the year ended December 31, 2020.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef