INSPERITY INC
For the period ended Dec 31, 2024. Filed Feb 11, 2025.
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FY2024 · Filed Feb 11, 2025
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“Income Taxes,”
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| 7. | Income Taxes |
Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and the amounts used for income tax purposes.
Significant components of the net deferred tax assets as reflected on the Consolidated Balance Sheets are as follows:
| December 31, | ||
|---|---|---|
| (in millions) | 2024 | 2023 |
| Deferred tax liabilities | ||
| Prepaid assets | $(4) | $(4) |
| Depreciation | (5) | (6) |
| Tenant improvements | (3) | (3) |
| Right-of-use leased assets | (19) | (17) |
| Intangibles | (3) | (3) |
| Total deferred tax liabilities | (34) | (33) |
| Deferred tax assets | ||
| Accrued incentive compensation | 12 | 9 |
| Workers’ compensation accruals | 4 | 5 |
| Accrued rent | 2 | 2 |
| Software development costs | 13 | 4 |
| Stock-based compensation | 15 | 14 |
| Operating lease liabilities | 22 | 20 |
| Other | 1 | — |
| Total deferred tax assets | 69 | 54 |
| Valuation allowance | (1) | (1) |
| Total net deferred tax assets | 68 | 53 |
| Net deferred tax assets | $34 | $20 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The components of income tax expense are as follows:
| Year Ended December 31, | |||
|---|---|---|---|
| (in millions) | 2024 | 2023 | 2022 |
| Current income tax expense | |||
| Federal | $41 | $49 | $62 |
| State | 8 | 9 | 15 |
| Total current income tax expense | 49 | 58 | 77 |
| Deferred income tax benefit | |||
| Federal | (11) | (3) | (9) |
| State | (3) | (1) | (2) |
| Total deferred income tax benefit | (14) | (4) | (11) |
| Total income tax expense | $35 | $54 | $66 |
The reconciliation of income tax expense computed at U.S. federal statutory tax rates to the reported income tax expense from continuing operations is as follows:
| Year Ended December 31, | |||
|---|---|---|---|
| (in millions) | 2024 | 2023 | 2022 |
| Expected income tax expense at 21% | $26 | $47 | $52 |
| State income taxes, net of federal benefit | 4 | 7 | 10 |
| Nondeductible expenses | 5 | 5 | 4 |
| Equity compensation, net | 1 | (4) | 1 |
| Research and development credit | (1) | (1) | (1) |
| Reported total income tax expense | $35 | $54 | $66 |
At December 31, 2024, we had net operating loss carryforwards totaling $1 million that expire from 2026 to 2030 related to an acquisition that occurred in 2010.
We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2024, 2023 and 2022, we had no uncertain tax positions, and as a result, have madeno provisions for interest or penalties related to uncertain tax positions. The tax years 2021 through 2023 remain open to examination by the Internal Revenue Service of the United States. The tax years 2020 through 2023 remain open to examination by various state tax authorities.
| 8. | Stockholders' Equity |
During 2024, we repurchased or withheld an aggregate of 697,177 shares of our common stock, as described below.
Repurchase Program
Our Board of Directors (the “Board”) has authorized a program to repurchase shares of our outstanding common stock (“Repurchase Program”). The purchases may be made from time to time in the open market or directly from stockholders at prevailing market prices based on market conditions and other factors. During 2024,516,798 shares were repurchased under the Repurchase Program. As of December 31, 2024, we were authorized to repurchase an additional 1,452,764 shares under the Repurchase Program.
The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposes a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. During 2023, we recorded the applicable excise tax in treasury stock of $1 million as part of the cost basis of stock repurchased and recorded a corresponding liability for the excise tax payable in other accrued liabilities in our Consolidated Balance Sheets.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Withheld Shares
During 2024, we withheld 180,379 shares to satisfy tax withholding obligations for the vesting of long-term incentive and restricted stock unit awards.
Dividends
The Board declared and paid quarterly dividends as follows:
| (amounts per share) | 2024 | 2023 |
|---|---|---|
| First quarter | $0.57 | $0.52 |
| Second quarter | 0.60 | 0.57 |
| Third quarter | 0.60 | 0.57 |
| Fourth quarter | 0.60 | 0.57 |
During 2024 and 2023, we declared and paid dividends totaling $89 million and $84 million, respectively.
Preferred Stock
At December 31, 2024, 20 million shares of preferred stock were authorized.
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