Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

v3.20.1
Income Taxes
3 Months Ended
Mar. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company provides for income taxes at the statutory rate of 21% adjusted for permanent differences expected to be realized, which primarily relate to non-deductible executive compensation expenses, restricted stock windfalls, and state income taxes. The following table presents a reconciliation of the reported amount of income tax expense to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations:
Three Months Ended March 31,
2020 2019
Income tax expense computed at the statutory federal income tax rate 21  % 21  %
State taxes net of federal expense % %
Section 162(m) —  % %
Effective income tax rate, before discrete items 23  % 23  %
   Discrete items (1)
—  % (2  %)
Effective income tax rate, after discrete items 23  % 21  %

(1) Accounts for the potential impact of periodic volatility of stock-based compensation tax deductions on future effective tax rates.
Management monitors company-specific, oil and natural gas industry and worldwide economic factors and assesses the likelihood that
the Company’s net deferred tax assets will be utilized prior to their expiration. At March 31, 2020, management considered all factors including the expected reversal of deferred tax liabilities (including the impact of available carryforward periods), historical operating income tax planning strategies and projected future taxable income and determined that it is more likely than not that the Company will realize its remaining deferred tax assets.