Salem Media Group, Inc. Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

The consolidated provision for income taxes is as follows:

Consolidated deferred tax assets and liabilities consist of the following:


	As of December 31,
	2019			2020
	(Dollars in thousands)
Deferred tax assets:
Financial statement accruals not currently deductible	$	4,652		$	6,580
Net operating loss, AMT credit and other carryforwards		45,521			44,154
State taxes		70			35
Operating lease liabilities under ASC 842		16,618			14,909
Other		6,847			11,222

Total deferred tax assets		73,708			76,900
Valuation allowance for deferred tax assets		(12,977	)		(48,073	)

Net deferred tax assets	$	60,731		$	28,827

Deferred tax liabilities:
Excess of net book value of property and equipment and software for financial reporting purposes over tax basis	$	2,391		$	1,065
Excess of net book value of intangible assets for financial reporting purposes over tax basis		82,939			84,163
Operating lease right-of-use assets under ASC 842		14,179			12,482
Other		—			—

Total deferred tax liabilities		99,509			97,710

Net deferred tax liabilities	$	(38,778	)	$	(68,883	)

The following table reconciles the above net deferred tax liabilities to the financial statements:


	As of December 31,
	2019			2020
	(Dollars in thousands)
Deferred income tax asset per balance sheet	$	—		$	—
Deferred income tax liability per balance sheet		(38,778	)		(68,883	)

	$	(38,778	)	$	(68,883	)

A reconciliation of the statutory federal income tax rate to the provision for income tax is as follows:


	Year Ended December 31,
	2019			2020
	(Dollars in thousands)
Statutory federal income tax (statutory tax rate)	$	(5,045	)	$	(4,995	)
Effect of state taxes, net of federal		3,714			10,468
Permanent items		329			379
State rate change		668			63
Valuation allowance		4,105			24,302
Tax Cuts and Jobs Act of 2017		—
Other, net		206			57

Provision for income taxes	$	3,977		$	30,274