v3.24.0.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Income Tax Benefit Attributable to Continuing Operations
Significant components of the Company’s income tax benefit attributable to continuing operations are as follows:
(In thousands)Year Ended December 31,
202320222021
Current - federal$(4,533)$(1,415)$— 
Current - state(439)(2,278)(1,293)
Current - foreign(6,855)(4,890)5,828 
Total current tax (expense) benefit attributable to continuing operations (11,827)(8,583)4,535 
Deferred - federal22,413 68,450 25,830 
Deferred - state6,200 22,041 5,678 
Deferred - foreign431 (1,516)415 
Total deferred tax benefit attributable to continuing operations29,044 88,975 31,923 
Income tax benefit attributable to continuing operations$17,217 $80,392 $36,458 
The Company recognized current tax expense attributable to continuing operations of $11.8 million and $8.6 million in 2023 and 2022, respectively, and current tax benefit attributable to continuing operations of $4.5 million in 2021. The increase in current tax expense in 2023 was primarily driven by increased taxable income domestically and in various foreign tax jurisdictions compared to 2022 and 2021.
In 2023, the Company recognized a deferred tax benefit attributable to continuing operations of $29.0 million, compared to $89.0 million and $31.9 million in 2022 and 2021, respectively.
The deferred tax benefit for 2023 was primarily driven by financial reporting depreciation and amortization in excess of amounts recorded for tax purposes and interest expense carryforwards in the current year, the tax benefits from which are partially offset by valuation allowances due to uncertainty regarding the Company’s ability to realize those assets in future periods.
The deferred tax benefit for 2022 was primarily driven by a partial release of the U.S valuation allowance due to the Company’s assessment of its deferred tax liabilities associated with billboard permits that will reverse in the future, thereby generating future taxable income for realization of U.S deferred tax assets. Prior to 2022, permits were treated as indefinite-lived intangible assets and were not amortized for financial reporting purposes. Refer to Note 2 for more information on the change in accounting estimate related to amortization of the Company’s permits.
The deferred tax benefit for 2021 was primarily driven by impairment charges on the Company’s then-indefinite-lived permits, which resulted in a reduction in the associated deferred tax liability without a corresponding change in valuation allowance.
Deferred Taxes
Significant components of the Company’s deferred tax liabilities and assets as of December 31, 2023 and 2022 are as follows:
(In thousands)December 31,December 31,
20232022
Deferred tax liabilities:
Operating lease right-of-use assets
$372,963 $349,279 
Intangible assets(1)
311,587 333,750 
Fixed assets21,691 17,718 
Other3,547 13,779 
Total deferred tax liabilities709,788 714,526 
Deferred tax assets:
Operating lease liabilities385,514 360,185 
Net operating loss carryforwards(2)
127,603 136,885 
Interest expense carryforwards(3)
136,617 119,336 
Accrued expenses16,496 15,821 
Stock-based compensation expense(4)
4,415 4,778 
Credit loss provision3,577 3,054 
Other11,533 18,987 
Total deferred tax assets685,755 659,046 
Less: Valuation allowance(5)
207,448 180,730 
Net deferred tax assets(6)
478,307 478,316 
Net deferred tax liabilities$231,481 $236,210 
(1)The deferred tax liabilities associated with intangible assets that are categorized as indefinite-lived, including permanent easements and tax-deductible goodwill, will not reverse over time unless the Company recognizes future impairment charges or sells these intangible assets.
(2)At December 31, 2023, the Company had recorded deferred tax assets for net operating loss carryforwards (tax-effected) for federal and state income tax purposes of $73.4 million. The Company’s federal and certain state net operating losses carry forward indefinitely without expiration, while the remaining state net operating loss carryforwards expire in various amounts through 2043. At December 31, 2023, the Company had recorded $54.2 million (tax-effected) of deferred tax assets for foreign net operating loss carryforwards, the majority of which may be carried forward without expiration.
(3)Section 163(j) of the Internal Revenue Code generally limits the deduction for business interest expense to 30% of adjusted taxable income and provides that any disallowed interest expense may be carried forward indefinitely. In applying the rules under Section 163(j), the Company made the election to be considered an operator of a “real property trade or business” and therefore records a carryforward deferred tax asset for federal and state purposes related to interest expense limitations on its non-real property assets.
(4)Full realization of the deferred tax assets related to stock-based compensation expense under ASC Subtopic 718-10 requires stock options to be exercised at a price equaling or exceeding the sum of the grant price plus the fair value of the option at the grant date and restricted stock to vest at a price equaling or exceeding the fair market value at the grant date. Accordingly, there can be no assurance that the stock price of the Company’s common stock will rise to levels sufficient to realize the entire deferred tax benefit currently reflected in the Company’s Consolidated Balance Sheet. See Note 13 for additional discussion of ASC Subtopic 718-10.
(5)Due to the Company’s evaluation of all available evidence, including significant negative evidence of cumulative losses in the related jurisdictions, the Company continues to record valuation allowances on deferred tax assets that are not expected to be realized. As of December 31, 2023, the Company had valuation allowances of $92.2 million recorded against a portion of its federal and state deferred tax assets and $115.2 million recorded against its deferred tax assets in foreign jurisdictions.
(6)The Company expects to realize the benefits of this portion of its deferred tax assets based upon its assessment of deferred tax liabilities that will reverse in the same carryforward period and jurisdiction and are of the appropriate character, as well as the Company's ability to generate future taxable income in certain tax jurisdictions. Any deferred tax liabilities associated with indefinite-lived intangible assets are not relied upon as a source of future taxable income.
Effective Tax Rate
Income (loss) from continuing operations before income taxes was as follows:
(In thousands)Year Ended December 31,
202320222021
U.S.$(200,961)$(77,153)$(321,194)
Foreign26,637 (50,542)(73,408)
Total loss from continuing operations before income taxes
$(174,324)$(127,695)$(394,602)
The reconciliation of income tax benefit computed at the U.S. federal statutory rates to income tax benefit attributable to continuing operations is as follows:
(In thousands)Year Ended December 31,
202320222021
AmountPercentAmountPercentAmountPercent
Income tax benefit at statutory rates$36,608 21.0 %$26,816 21.0 %$82,866 21.0 %
State income taxes, net of federal tax effect7,778 4.5 %3,683 2.9 %10,088 2.6 %
Foreign income taxes(2,204)(1.3)%(17,018)(13.3)%(13,742)(3.5)%
Nondeductible items(4,447)(2.6)%(6,004)(4.7)%(229)(0.1)%
Changes in valuation allowance and other estimates(20,454)(11.7)%79,352 62.1 %(45,710)(11.6)%
Other, net(64)— %(6,437)(5.0)%3,185 0.8 %
Income tax benefit attributable to continuing operations$17,217 9.9 %$80,392 63.0 %$36,458 9.2 %
The effective tax rates for continuing operations of 9.9%, 63.0% and 9.2% in 2023, 2022 and 2021, respectively, were largely impacted by increases in the valuation allowance recorded against deferred tax assets resulting from losses and interest expense carryforwards in the U.S. and certain foreign jurisdictions due to uncertainty regarding the Company’s ability to realize those assets in future periods. In 2022, however, this was more than offset by a reduction in the valuation allowance driven by the classification change of permit intangible assets from indefinite-lived to finite-lived for financial reporting purposes.
Unrecognized Tax Benefits
A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
(In thousands)Year Ended December 31,
Unrecognized Tax Benefits20232022
Balance at beginning of period$21,676 $20,506 
Increases for tax position taken in the current year270 2,045 
Increases for tax positions taken in previous years694 228 
Decreases for tax positions taken in previous years
(916)(424)
Decreases due to settlements with tax authorities(156)(605)
Decreases due to lapse of statute of limitations(1)
(7,912)(74)
Balance at end of period$13,656 $21,676 
(1)All federal income tax matters through 2019 are closed. Substantially all material state, local, and foreign income tax matters have been concluded for years through 2008.
The Company records interest and penalties related to unrecognized tax benefits in current income tax expense. At December 31, 2023 and 2022, the total amount of interest accrued was $6.1 million and $5.2 million, respectively, resulting in total unrecognized tax benefits, including accrued interest and penalties, of $19.7 million and $26.9 million, respectively.
The unrecognized tax benefits, net of deposits on account with taxing authorities, are reflected on the Company’s Consolidated Balance Sheets as follows: $15.9 million is included in “Other liabilities” at both December 31, 2023 and 2022. In addition, $3.9 million and $11.0 million of unrecognized tax benefits are netted with the Company’s deferred tax assets for its net operating loss carryforwards at December 31, 2023 and 2022, respectively.
The total amount of unrecognized tax benefits at December 31, 2023 and 2022 that, if recognized, would have impacted the effective income tax rate was $8.8 million and $9.5 million, respectively.