Schneider National Inc
For the period ended Dec 31, 2023. Filed Feb 23, 2024.
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FY2023 · Filed Feb 23, 2024
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Income Taxes
- INCOME TAXES
The components of the provision for income taxes for the years ended December 31, 2023, 2022, and 2021 were as follows:
| (in millions) | 2023 | 2022 | 2021 |
|---|---|---|---|
| Current: | |||
| Federal | $15.2 | $28.1 | $112.5 |
| Foreign | (10.1) | 15.8 | — |
| State | 6.7 | 19.3 | 22.1 |
| 11.8 | 63.2 | 134.6 | |
| Deferred: | |||
| Federal | 47.7 | 82.8 | 0.8 |
| State and other | 8.1 | 0.2 | 1.2 |
| 55.8 | 83.0 | 2.0 | |
| Total provision for income taxes | $67.6 | $146.2 | $136.6 |
For the years ended December 31, 2023 and 2022, the foreign (benefit) provision for income taxes is primarily related to the finalization of the tax impact on the sale of our Canadian facility; for the year ended December 31, 2021, the foreign provision is insignificant in relation to our overall provision.
The provision for income taxes for the years ended December 31, 2023, 2022, and 2021 differed from the amounts computed using the federal statutory rate in effect as follows:
| 2023 | 2022 | 2021 | ||||
|---|---|---|---|---|---|---|
| (in millions, except percentages) | Dollar Impact | Rate | Dollar Impact | Rate | Dollar Impact | Rate |
| Income tax at federal statutory rate | $64.3 | 21.0% | $126.8 | 21.0% | $113.8 | 21.0% |
| State tax—net of federal effect | 13.8 | 4.5 | 15.4 | 2.6 | 18.9 | 3.5 |
| Change in valuation allowance | (10.7) | (3.5) | 10.7 | 1.8 | — | — |
| Other—net | 0.2 | 0.1 | (6.7) | (1.2) | 3.9 | 0.7 |
| Total provision for income taxes | $67.6 | 22.1% | $146.2 | 24.2% | $136.6 | 25.2% |
The components of the net deferred tax liability included in deferred income taxes in the consolidated balance sheets as of December 31, 2023 and 2022 were as follows:
| (in millions) | 2023 | 2022 |
|---|---|---|
| Deferred tax assets: | ||
| Compensation and employee benefits | $8.1 | $7.8 |
| Operating lease liabilities | 21.4 | 16.4 |
| State net operating losses and credit carryforwards | 10.5 | 9.4 |
| Foreign capital loss carryforward | — | 10.7 |
| Other | 14.2 | 14.9 |
| Total gross deferred tax assets | 54.2 | 59.2 |
| Valuation allowance | (0.9) | (12.8) |
| Total deferred tax assets—net of valuation allowance | 53.3 | 46.4 |
| Deferred tax liabilities: | ||
| Property and equipment | 596.3 | 548.0 |
| Prepaid expenses | 6.8 | 5.6 |
| Intangible assets | 8.1 | 2.4 |
| Operating lease right-of-use assets | 19.6 | 15.2 |
| Other | 18.2 | 13.4 |
| Total gross deferred tax liabilities | 649.0 | 584.6 |
| Net deferred tax liability | $595.7 | $538.2 |
Unrecognized Tax Benefits
Our unrecognized tax benefits as of December 31, 2023 would reduce the provision for income taxes if subsequently recognized. Potential interest and penalties related to unrecognized tax benefits are recorded in income tax expense. Accrued interest and penalties for such unrecognized tax benefits as of December 31, 2023 and 2022 were $2.7 million and $3.1 million, respectively. We expect no significant increases or decreases for unrecognized tax benefits during the twelve months immediately following the December 31, 2023 reporting date.
As of December 31, 2023, 2022, and 2021, a reconciliation of the beginning and ending unrecognized tax benefits, which is recorded as other noncurrent liabilities in the consolidated balance sheets, is as follows:
| (in millions) | 2023 | 2022 | 2021 |
|---|---|---|---|
| Gross unrecognized tax benefits—beginning of year | $6.0 | $5.2 | $4.3 |
| Gross increases—tax positions related to current year | — | 1.0 | 0.9 |
| Gross decreases—tax positions taken in prior years | (0.5) | (0.2) | — |
| Settlements | (1.1) | — | — |
| Gross unrecognized tax benefits—end of year | $4.4 | $6.0 | $5.2 |
Tax Examinations
We file a U.S. federal income tax return, as well as income tax returns in a majority of state tax jurisdictions. We also file returns in foreign jurisdictions. The years 2020,2021, and 2022 are open for examination by the IRS, and various years are open for examination by state and foreign tax authorities. In October 2023, the statute for 2019 expired. State and foreign jurisdictional statutes of limitations generally range from three to four years.
Carryforwards
As of December 31, 2023, we had $169.8 million of state net operating loss carryforwards which are subject to expiration from 2024 to 2044. We also had state credit carryforwards of $1.2 million, which are subject to expiration from 2027 to 2038, andno capital loss carryforwards. The deferred tax assets related to carryforwards at December 31, 2023 were $9.4 million for state net operating loss carryforwards and $0.4 million for state credit carryforwards. Carryforwards are reviewed for recoverability based on historical taxable income, the expected reversals of existing temporary differences, tax-planning strategies, and projections of future taxable income. At December 31, 2023, we carried a total valuation allowance of $0.9 million, which was against state deferred tax assets.
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