Annual report pursuant to Section 13 and 15(d)

Income Taxes

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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
The components of income tax expense were as follows for the years ended December 31, 2021 and 2020:
2021 2020
Current tax expense:
Federal $ 48,368  $ 98,187 
State 13,346  22,214 
$ 61,714  $ 120,401 
Deferred tax expense:
Federal $ 31,568  $ 2,190 
State 9,867  902 
41,435  3,092 
Income tax expense $ 103,149  $ 123,493 
The following table presents a reconciliation of the recorded income tax expense of continuing operations to the amount of taxes computed by applying the applicable federal statutory tax rate of 21.0% to income from continuing operations before income taxes, as of December 31, 2021 and 2020, respectively:
2021 2020
Amount Percent Amount Percent
Income tax expense at federal statutory rate $ 81,254  21.0  % $ 103,755  21.0  %
State income taxes, net of federal tax benefit 19,449  5.0  % 19,904  4.0  %
Nondeductible compensation 2,092  0.5  % 7,115  1.4  %
Permanent items 789  0.2  % 1,887  0.4  %
Federal and state tax credits, net of federal tax benefit (648) (0.2) % (536) (0.1) %
Deferred compensation adjustment —  —  % (8,834) (1.8) %
Other, net 213  0.2  % 202  —  %
$ 103,149  26.7  % $ 123,493  25.0  %
The tax effects of significant temporary differences which gave rise to the Company’s deferred tax assets and liabilities are as follows at December 31, 2021 and 2020:
2021 2020
Deferred tax assets:
Investor reserves $ 8,979  $ 7,955 
Intangible assets —  7,494 
Accrued compensation and benefits 3,249  3,705 
Deferred compensation 16,522  13,277 
Lease liability 24,727  23,440 
Other accrued liabilities 195  1,240 
Total deferred tax assets $ 53,672  $ 57,111 
Deferred tax liabilities:
Mortgage servicing rights $ (160,966) $ (98,660)
Intangible assets (3,537) — 
Trading securities (27) (19)
Derivatives, net (6,542) (22,743)
Right-of-use assets (22,642) (23,127)
Property and equipment (2,203) (1,932)
Total deferred tax liabilities (195,917) (146,481)
Net deferred tax liabilities $ (142,245) $ (89,370)
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities including the impact of available carryback and carryforward periods and projected future taxable income. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these deductible differences. There are no valuation allowances on deferred tax assets as of December 31, 2021 or 2020.
At December 31, 2021 the Company had no federal or state net operating loss carryforwards or tax credit carryforwards.
The Company records interest related to unrecognized tax benefits in interest expense and records penalties as a component of income taxes. There are no unrecognized tax benefits as of December 31, 2021 or 2020, and there were no changes in unrecognized tax benefits during the year. The Company is required to analyze all open years, as defined by the statutes of limitations, for all major jurisdictions, which includes federal and state jurisdictions. The Company is no longer subject to federal examinations prior to 2018 tax year or for state examinations prior to 2017 tax year.
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was enacted. The CARES Act introduced a number of tax law changes intended to assist taxpayers impacted by COVID-19. On December 27, 2020, the Consolidated Appropriations Act, 2021 ("CAA, 2021") was enacted. Lastly, on March 11, 2021, the American Rescue Plan Act ("ARPA") was enacted. The CAA 2021 and ARPA continued to provide tax benefits and relief to taxpayers impacted by the ongoing COVID-19 pandemic. The Company examined the tax impacts from all three Acts and determined there is no material impact to the financial statements at December 31, 2021.