Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v3.22.4
INCOME TAXES
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The components of income tax expense were as follows for the years ended December 31, 2022 and 2021:
2022 2021
Current tax expense (benefit):
Federal $ (199) $ 48,368 
State 870  13,346 
$ 671  $ 61,714 
Deferred tax expense:
Federal $ 72,764  $ 31,568 
State 17,954  9,867 
90,718  41,435 
Income tax expense $ 91,389  $ 103,149 
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, 2022 and 2021, respectively:
2022 2021
Amount Percent Amount Percent
Income tax expense at federal statutory rate $ 88,204  21.0  % $ 81,254  21.0  %
State income taxes, net of federal tax benefit 16,297  3.9  % 19,449  5.0  %
Contingent consideration (9,480) (2.3) % —  —  %
Nondeductible compensation (876) (0.2) % 2,092  0.5  %
Permanent items (2,150) (0.5) % 789  0.2  %
Federal and state tax credits, net of federal tax benefit (520) (0.1) % (648) (0.2) %
Other, net (86) 0.0  % 213  0.2  %
$ 91,389  21.8  % $ 103,149  26.7  %
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, 2022 and 2021:
2022 2021
Deferred tax assets:
Investor reserves $ 8,304  $ 8,979 
Accrued compensation and benefits 3,695  3,249 
Derivatives, net 515  — 
Deferred compensation 16,519  16,522 
Lease liability 21,551  24,727 
Other accrued liabilities —  195 
R&D credit carryforwards 836  — 
Net operating loss carryforwards 12,313  — 
Capitalized research and experimental expenditures 4,259  — 
Charitable contributions 135  — 
Total deferred tax assets $ 68,127  $ 53,672 
Deferred tax liabilities:
Mortgage servicing rights $ (273,101) $ (160,966)
Intangible assets (1,017) (3,537)
Trading securities (24) (27)
Derivatives, net —  (6,542)
Other accrued liabilities (5,957) — 
Right-of-use assets (19,424) (22,642)
Property and equipment (1,567) (2,203)
Total deferred tax liabilities (301,090) (195,917)
Net deferred tax liabilities $ (232,963) $ (142,245)
At December 31, 2022, the Company has federal and state net operating loss ("NOL") carryforwards of approximately $50.1 million and $35.7 million, respectively. The federal NOL carryforwards can be carried forward indefinitely and can offset up to 80% of future taxable income each year. The state NOL carryforwards begin to expire in 2027.
At December 31, 2022, the Company has federal and state research tax credit carryforwards of approximately $0.5 million and $0.4 million, respectively. The federal research tax credit carryovers begin to expire in 2042 and the state tax credit carryovers do not expire and can be carried forward indefinitely until utilized.
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, 2022 or 2021.
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, 2022 or 2021, 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 2019 tax year or for state examinations prior to 2018 tax year.