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

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

The consolidated provision for income taxes is as follows:

Consolidated deferred tax assets and liabilities consist of the following:


	As of December 31,
	2020			2021
	(Dollars in thousands)
Deferred tax assets:
Financial statement accruals not currently deductible	$	2,908		$	2,738
Allowance for bad debt reserve		3,672			3,399
Net operating loss, AMT credit and other carryforwards		44,154			35,290
State taxes		35			216
Operating lease liabilities under ASC 842		14,909			13,596
Other		2,440			3,965

Total deferred tax assets		68,118			59,204
Valuation allowance for deferred tax assets		(48,073	)		(39,135	)

Net deferred tax assets	$	20,045		$	20,069


Deferred tax liabilities:
Excess of net book value of property and equipment and software for financial reporting purposes over tax basis	$	1,066		$	145
Excess of net book value of intangible assets for financial reporting purposes over tax basis		75,380			75,747
Operating lease right-of-use assets under ASC 842		12,482			11,189

Total deferred tax liabilities		88,928			87,081

Net deferred tax liabilitie s	$	(68,883	)	$	(67,012	)

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


	As of December 31,
	2020			2021
	(Dollars in thousands)

Deferred income tax asset per balance sheet	$	—		$	—
Deferred income tax liability per balance sheet		(68,883	)		(67,012	)

	$	(68,883	)	$	(67,012	)

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


	Year Ended December 31,
	2020			2021
	(Dollars in thousands)


Statutory federal income tax (statutory tax rate)	$	(4,995	)	$	8,559
Effect of state taxes, net of federal		10,468			643
Permanent items		379			172
PPP loan forgiveness		—			(2,351	)
State rate change		63			531
Valuation allowance		24,302			(8,903	)
Stock based compensation cancellation		196			181
Other, net		(139	)		409

Provision for (benefit from) income taxes	$	30,274		$	(759	)