|12 Months Ended|
Dec. 31, 2017
10. Income Taxes
The provision for income tax expense (benefit) consists of the following:
A reconciliation of income tax expense computed at the federal statutory rate to the provision for income taxes for the years ended December 31, 2017, 2016 and 2015 is as follows:
Significant components of the Company’s deferred tax liabilities and assets are as follows:
Deferred income tax balances reflect the effects of temporary differences between the carrying amount of assets and liabilities and their tax bases and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered.
State operating loss carry forwards for tax purposes will result in future tax benefits of approximately $3,386. These loss carry-forwards will begin to expire in 2021. The Company evaluated the need to maintain a valuation allowance against certain deferred tax assets. Based on this evaluation, which included a review of recent profitability, future projections of profitability, and future deferred tax liabilities, the Company concluded that a valuation allowance of approximately $777 is necessary at December 31, 2017 for the state net operating loss carry-forwards which are likely to expire prior to the Company's ability to use the tax benefit.
A reconciliation of the beginning and ending liability for uncertain tax positions is as follows:
The amount of the unrecognized tax benefits that would affect the effective tax rate, if recognized, was approximately $1,706 at December 31, 2017. The Company recognizes interest and penalties related to the unrecognized tax benefits in income tax expense. Approximately $804 and $79 of accrued interest and penalties is reported as an income tax liability at December 31, 2017 and 2016, respectively. The liability for unrecognized tax benefits is reported in Other Long‑term Liabilities on the consolidated balance sheets at December 31, 2017 and 2016.
The Company files income tax returns in the United States (federal) and various states. Tax years open to examination by tax authorities under the statute of limitations include 2014, 2015 and 2016 for Federal and 2013 through 2016 for most states. The Federal 2012, 2013 and 2015 audits have been closed. The IRS Audit on the 2015 Federal tax return was substantially complete in 2017 but the statute of limitations is still open for this tax year. Tax returns for the 2017 tax year have not yet been filed.
On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (“The Act”). Over the long term, the Company generally expects to benefit from the lower statutory rates provided by The Act and is currently assessing all other aspects relevant to the Company. The Company operates solely in the United States; therefore, the international provisions of The Act do not apply.The Company is assessing the impact of the provisions of The Act, most of which do not apply until 2018. The only material item that impacts the Company for 2017 is the reduction in the deferred tax rate. As a result of the reduction in the U.S. corporate income tax rate from 35.0 percent to 21.0 percent under The Act, the Company has recorded a provisional reduction to its net deferred tax liability of $22,452, and a corresponding decrease to income tax expense in the Company’s Consolidated Statement of Operations for the year ended December 31, 2017.
On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of The Act. The Company has recognized the provisional tax impacts related to the revaluation of deferred tax assets and liabilities and included these amounts in its consolidated financial statements for the year ended December 31, 2017. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of The Act. The accounting is expected to be complete when the 2017 U.S. corporate income tax return is filed in 2018.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://www.xbrl.org/2003/role/presentationRef