|
13. |
INCOME TAXES |
The items comprising income tax expense are as follows (dollars in thousands):
|
|
|
Year Ended December 31, |
|
|||||||||
|
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|||
|
Provision for current income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
$ |
10,136 |
|
|
$ |
12,207 |
|
|
$ |
11,308 |
|
|
State |
|
|
1,791 |
|
|
|
3,044 |
|
|
|
2,292 |
|
|
Total provision for current income taxes |
|
|
11,927 |
|
|
|
15,251 |
|
|
|
13,600 |
|
|
Provision (benefit) for deferred income taxes, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
|
199 |
|
|
|
(1,476 |
) |
|
|
(1,109 |
) |
|
State |
|
|
(2,286 |
) |
|
|
(372 |
) |
|
|
89 |
|
|
Total benefit for deferred income taxes, net |
|
|
(2,087 |
) |
|
|
(1,848 |
) |
|
|
(1,020 |
) |
|
Total provision for income taxes |
|
$ |
9,840 |
|
|
$ |
13,403 |
|
|
$ |
12,580 |
|
The following schedule reconciles the statutory Federal tax rate to the effective income tax rate:
|
|
|
Year Ended December 31, |
|
|||||||||
|
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|||
|
Federal statutory tax rate |
|
|
35 |
% |
|
|
35 |
% |
|
|
35 |
% |
|
Increase (decrease) resulting from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
State income taxes, net of Federal income tax benefit |
|
|
4 |
% |
|
|
4 |
% |
|
|
4 |
% |
|
Nondeductible expenses |
|
|
1 |
% |
|
|
1 |
% |
|
|
3 |
% |
|
Research credit, Federal benefit |
|
|
(3 |
%) |
|
|
(2 |
%) |
|
|
(1 |
%) |
|
Section 199 - Qualified production activities |
|
|
(2 |
%) |
|
|
(2 |
%) |
|
|
(3 |
%) |
|
Stock-based compensation |
|
|
(21 |
%) |
|
|
(12 |
%) |
|
|
0 |
% |
|
Return to provision |
|
|
(1 |
%) |
|
|
0 |
% |
|
|
0 |
% |
|
Remeasurement of deferred tax assets |
|
|
1 |
% |
|
|
0 |
% |
|
|
0 |
% |
|
Other |
|
|
(1 |
%) |
|
|
(1 |
%) |
|
|
0 |
% |
|
Effective income tax rate |
|
|
13 |
% |
|
|
23 |
% |
|
|
38 |
% |
Our effective income tax rate was 13% and 23% for the years ended December 31, 2017 and 2016, respectively. The lower effective income tax rate for the year ended December 31, 2017 primarily resulted from the recognition of excess tax benefits from share-based payment awards.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of our deferred tax assets and liabilities were as follows (dollars in thousands):
|
|
|
December 31, |
|
|||||
|
|
|
2017 |
|
|
2016 |
|
||
|
Deferred income tax assets (liabilities): |
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
$ |
1,446 |
|
|
$ |
2,658 |
|
|
Investment in Paycom Payroll Holdings, LLC |
|
|
101 |
|
|
|
(1,487 |
) |
|
Net operating losses |
|
|
1,677 |
|
|
|
36 |
|
|
Federal tax credits |
|
|
70 |
|
|
|
— |
|
|
Noncurrent deferred income tax assets, net |
|
$ |
3,294 |
|
|
$ |
1,207 |
|
The Tax Act was enacted on December 22, 2017. The Tax Act reduces the US federal corporate tax rate from 35% to 21% effective January 1, 2018. We remeasured certain deferred tax assets and liabilities based on the rate at which they are expected to be realized or settled in the future, which is generally 21%. The amount recorded related to the remeasurement of our deferred tax balance was $0.4 million of income tax expense.
At December 31, 2017, we had net operating loss carryforwards for state income tax purposes of approximately $1.7 million that are available to offset future state taxable income that begin expiring in 2030.
At December 31, 2017 and 2016, we had no material unrecognized tax benefits related to uncertain tax positions.
We file income tax returns with the United States federal government and various state jurisdictions. Our 2007 through 2017 U.S. federal and state income tax returns remain open to examination by tax authorities, due to the usage of net operating loss carryovers.