Annual report pursuant to Section 13 and 15(d)

Income Taxes

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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
We are subject to U.S. federal income tax as well as income tax in multiple state and local jurisdictions. With few exceptions, the statute of limitations for these jurisdictions is no longer open for audit or examinations for the years before 2018 for federal and state income taxes in the U.S.

We file consolidated federal income tax returns that include all of our U.S. subsidiaries. The components of the provision for income taxes from continuing operations for the years ended December 31, 2023, 2022 and 2021 were as follows (in thousands):
  2023 2022 2021
Current:
Federal $ 11,556  $ 9,483  $ (8)
State 2,205  1,485  (193)
Foreign 1,138  35  1,066 
  14,899  11,003  865 
Deferred:      
Federal (1,148) (1,890) (3,600)
State 3  (61) (1,033)
Foreign 7  —  — 
  (1,138) (1,951) (4,633)
Provision for income taxes $ 13,761  $ 9,052  $ (3,768)

The differences between the amount of tax computed at the federal statutory rate of 21% in 2023, 2022 and 2021, and the provision for income taxes from continuing operations for the years ended December 31, 2023, 2022 and 2021 were as follows (in thousands):
  2023 2022 2021
Tax at statutory federal income tax rate $ 11,952  $ 7,499  $ (3,102)
Increases (decreases) in tax resulting from:      
State taxes, net of federal tax benefit 2,019  1,459  (482)
Permanent differences, net (193) 287  (350)
Tax credits (461) (418) (160)
Prior year true-up adjustment 269  (45) 19 
Valuation allowance 77  324  331 
Other provision adjustments 98  (54) (24)
Provision for income taxes $ 13,761  $ 9,052  $ (3,768)
The tax effect of temporary differences representing deferred tax assets and liabilities as of December 31, 2023 and 2022 was as follows (in thousands):
  2023 2022
Deferred compensation and accrued paid leave $ 3,003  $ 3,881 
Accrued expense 1,429  1,053 
Inventory reserve 13,980  12,934 
Operating lease liabilities 6,249  5,544 
Stock-based compensation 1,697  869 
Capitalized inventory 1,335  1,128 
US operating and capital loss carryforward 7,637  6,040 
Disallowed interest expense 1,663  236 
Tax credit carryforward 1,492  1,640 
Foreign country operating loss carryforward 806  749 
39,291  34,074 
Valuation allowance (a)
(9,906) (8,337)
    Total gross deferred tax assets 29,385  25,737 
Interest rate swaps (708) (1,651)
Depreciation (2,925) (3,091)
Goodwill and intangible assets (26,666) (20,355)
Operating lease right-of-use assets (5,939) (5,313)
Other (132) (86)
    Total gross deferred tax liabilities (36,370) (30,496)
Net deferred tax liabilities $ (6,985) $ (4,759)
(a) A valuation allowance was provided against US capital loss in connection with the stock sale of Prime Turbines, certain state net operating loss, tax credit, and foreign tax loss deferred tax assets arising from carryforwards of unused tax benefits.
(b) Certain amounts from prior year have been reclassified to conform with current year presentation.

We file income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. With few exceptions, the statute of limitations for these jurisdictions is no longer open for audit or examinations for the years before 2019.

As of December 31, 2023, we had various tax losses and tax credits that may be applied against future taxable income. The majority of such tax attributes will expire in 2026 through 2034; however, some may be carried forward indefinitely.

The Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15% intended to be effective on January 1, 2024. While the US has not yet adopted the Pillar Two rules, many countries took steps to incorporate Pillar Two model rule concepts into their domestic laws in 2023. Considering that we do not have material operations in jurisdictions with tax rates lower than the Pillar Two minimum, we do not expect these rules will significantly increase our global tax costs. We will continue to monitor US and global legislative action related to Pillar Two for future potential impacts.