Deferred Tax Assets, Accrued Transaction Fees

COSTAR GROUP, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS12.    INCOME TAXES   
The components of the provision for income taxes attributable to operations consist of the following (in thousands):

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|   | Year Ended December 31, |
|   | 2021 |  | 2020 |  | 2019 |
| Current: |   |  |   |  |   |
| Federal | $ | 61,290  |  |  | $ | 43,461  |  |  | $ | 53,039  |  |
| State | 24,618  |  |  | 11,726  |  |  | 13,422  |  |
| Foreign | 1,331  |  |  | 195  |  |  | 1,305  |  |
| Total current | 87,239  |  |  | 55,382  |  |  | 67,766  |  |
| Deferred: |  |  |   |  |   |
| Federal | 22,859  |  |  | (9,599) |  |  | 6,881  |  |
| State | 8,467  |  |  | (926) |  |  | 2,424  |  |
| Foreign | (7,161) |  |  | (1,005) |  |  | (1,085) |  |
| Total deferred | 24,165  |  |  | (11,530) |  |  | 8,220  |  |
| Total provision for income taxes | $ | 111,404  |  |  | $ | 43,852  |  |  | $ | 75,986  |  |

  
The components of deferred tax assets and liabilities consist of the following (in thousands):

|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
|   | December 31, |
|   | 2021 |  | 2020 |
| Deferred tax assets: |   |  |   |
| Allowance for credit losses | $ | 3,601  |  |  | $ | 3,698  |  |
| Accrued compensation | 3,913  |  |  | 4,934  |  |
| Stock compensation | 18,956  |  |  | 15,289  |  |
| Net operating losses | 45,835  |  |  | 38,498  |  |
| Accrued reserve and other | 4,134  |  |  | 5,900  |  |
| Lease liabilities | 28,306  |  |  | 34,758  |  |
|  |  |  |  |
|  |  |  |  |
|  |  |  |  |
| Research and development credits | 5,812  |  |  | 6,059  |  |
| Accrued transaction fees | —  |  |  | 13,334  |  |
| Total deferred tax assets, prior to valuation allowance | 110,557  |  |  | 122,470  |  |
|  |  |  |  |
| Valuation allowance | (5,694) |  |  | (11,170) |  |
| Total deferred tax assets, net of valuation allowance | 104,863  |  |  | 111,300  |  |
|  |  |  |  |
| Deferred tax liabilities: |   |  |   |
| Deferred commission costs, net | (25,700) |  |  | (23,691) |  |
| Lease right-of-use assets | (22,574) |  |  | (27,168) |  |
| Prepaid expenses | (2,569) |  |  | (2,384) |  |
| Property and equipment, net | (21,827) |  |  | (13,078) |  |
| Intangible assets, net | (125,815) |  |  | (112,987) |  |
| Total deferred tax liabilities | (198,485) |  |  | (179,308) |  |
|  |  |  |  |
| Net deferred tax assets (liabilities) | $ | (93,622) |  |  | $ | (68,008) |  |

For the years ended December 31, 2021 and 2020, the Company has not recognized deferred tax liabilities for temporary differences related to investments in foreign subsidiaries that were deemed permanently reinvested. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable because such liability, if any, depends on certain circumstances existing if and when remittance occurs. A deferred tax liability will be recognized if and when the Company no longer plans to permanently reinvest these undistributed earnings.F-32
