Sonic Automotive, Inc. Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2024

The provision for income taxes - benefit (expense) consists of the following:


	Year Ended December 31,
	2024		2023		2022
	(In millions)
Current tax expense:
Federal	$	(52.7)	$	(62.6)	$	(93.8)
State and local	(16.5)		(19.7)		(20.4)
Total current tax expense	(69.2)		(82.3)		(114.2)
Deferred tax benefit:
Federal	23.1		17.1		10.0
State and local	6.0		1.5		2.7
Total deferred tax benefit	29.1		18.6		12.7
Total provision for income taxes - expense	$	(40.1)	$	(63.7)	$	(101.5)

The reconciliation of the U.S. statutory federal income tax rate with our federal and state overall effective income tax rate is as follows:


	Year Ended December 31,
	2024		2023		2022
U.S. statutory federal income tax rate	21.0	%	21.0	%	21.0	%
Effective state income tax rate	5.2	%	6.1	%	7.8	%
Valuation allowance adjustments	(0.1)	%	(0.3)	%	(0.8)	%
Uncertain tax positions	0.6	%	2.2	%	(0.1)	%
Effect of goodwill impairment and indefinite lived intangible assets	(12.1)	%	0.0	%	24.9	%


Non-deductible compensation	1.9	%	1.4	%	2.2	%

Other	(0.8)	%	(4.1)	%	(1.6)	%
Effective income tax rate	15.7	%	26.3	%	53.4	%

Significant components of our deferred tax assets and liabilities were as follows:


	December 31, 2024		December 31, 2023
	(In millions)
Deferred tax assets:
Accruals and reserves	$	40.6	$	40.1
State net operating loss carryforwards	6.6		6.7



Basis difference in liabilities related to right-of-use assets	147.7		84.6

Other	4.4		4.8
Total deferred tax assets	199.3		136.2

Deferred tax liabilities:


Basis difference in property and equipment	(3.8)		(2.5)
Basis difference in goodwill	(79.7)		(13.2)
Basis difference in right-of-use assets	(133.2)		(71.3)
Other	(2.6)		(2.3)
Total deferred tax liabilities	(219.3)		(89.3)
Valuation allowance	(6.2)		(6.3)
Net deferred tax asset (liability)	$	(26.2)	$	40.6