Entity information:
INCOME TAXES:

Income tax benefit provided on earnings from continuing operations consisted of:
 
For The Years Ended December 31,
 
2017
 
2016
 
2015
Current:
 
 
 
 
 
U.S. Federal
$
(31,791
)
 
$
(101,596
)
 
$
839

U.S. State
(1,838
)
 
(8,699
)
 
(5,657
)
 
(33,629
)
 
(110,295
)
 
(4,818
)
Deferred:
 
 
 
 
 
U.S. Federal
(166,112
)
 
80,207

 
(308,797
)
U.S. State
23,283

 
(4,315
)
 
33,256

 
(142,829
)
 
75,892

 
(275,541
)
 
 
 
 
 
 
Total Income Tax Benefit
$
(176,458
)
 
$
(34,403
)
 
$
(280,359
)













The components of the net deferred taxes are as follows:
 
December 31,
 
2017
 
2016
Deferred Tax Assets:
 
 
 
Alternative minimum tax
188,080

 
219,872

Net operating loss - State
107,756

 
74,310

Net operating loss - Federal
99,524

 
144,450

Foreign tax credit
44,402

 
39,850

Gas well closing
16,648

 
20,512

Salary retirement
9,404

 
16,928

Capital lease
2,020

 
3,210

Gas derivatives
—

 
72,105

Other
33,697

 
48,961

Total Deferred Tax Assets
501,531

 
640,198

Valuation Allowance
(136,576
)
 
(282,778
)
Net Deferred Tax Assets
364,955

 
357,420

 
 
 
 
Deferred Tax Liabilities:
 
 
 
Property, plant and equipment
(385,366
)
 
(450,695
)
Gas derivatives
(15,248
)
 
—

Advance gas royalties
(3,648
)
 
(5,824
)
Equity Partnerships
(1,251
)
 
(2,237
)
Other
(3,815
)
 
(3,760
)
Total Deferred Tax Liabilities
(409,328
)
 
(462,516
)
 
 
 
 
Net Deferred Tax Liability
$
(44,373
)
 
$
(105,096
)

Deferred taxes are recorded for certain tax benefits, including net operating losses and tax credit carry-forwards, provided that management assesses the utilization of those assets to be more likely than not. A valuation allowance is required when it is more likely than not that all or a portion of a deferred tax asset will not be realized. All available evidence, both positive and negative, must be considered in determining the need for a valuation allowance. For the years ended December 31, 2017 and 2016, positive evidence considered included financial earnings generated over the past three years for certain subsidiaries, reversals of financial to tax temporary differences and the implementation of and/or ability to employ various tax planning strategies. Negative evidence included financial and tax losses generated in prior periods, the inability to achieve forecasted results for those periods and the impact of expected future financial results from normal operations on the utilization of tax credits. CNX continues to report, on an after federal tax basis, a deferred tax asset related to state operating losses of $107,756 with a related valuation allowance of $61,560 at December 31, 2017. The deferred tax asset related to state operating losses, on an after tax adjusted basis, was $74,310 with a related valuation allowance of $60,488 at December 31, 2016. A review of positive and negative evidence regarding these state tax benefits concluded that the valuation allowances for various CNX subsidiaries was warranted. These net operating losses expire at various times between 2018 and 2037. A valuation allowance on foreign tax credits of $44,402 and $39,850 has also been recorded at December 31, 2017 and 2016, respectively. The foreign tax credits expire at various times between 2021 and 2023. A valuation allowance on deferred equity compensation for covered individuals as provided by Section 162(m) of $5,957 was recorded for 2017. No such valuation allowance was recorded for 2016. A valuation allowance on charitable contribution carry-forwards of $3,156 and $5,051 has been recorded for 2017 and 2016, respectively. The Company's charitable contributions carry-forwards expire at various times between 2018 and 2022.

As of December 31, 2017, the Company has a deferred tax asset related to federal net operating losses of $99,524, which expire at various times between 2034 and 2037. In connection with the restructuring and separation of the Company's coal business in November 2017, certain net operating loss carry-forwards were required to be written off under the Tax Cuts and Jobs Act (the "Act") passed on December 22, 2017. As a result, the Company has written off the deferred tax assets associated with these net operating losses, a reduction of $24,942 to the total deferred tax asset for net operating losses.

The deferred tax assets attributable to the state tax effect of future deductible temporary differences for certain CNX subsidiaries with histories of financial and tax losses were also reviewed for positive and negative evidence regarding the realization of the associated deferred tax assets. A valuation allowance of $9,088 and $10,591 on an after federal tax adjusted basis has also been recorded for 2017 and 2016, respectively.

As of December 31, 2017, the Company has a deferred tax asset relating to federal alternative minimum tax credits of $188,080, a decrease of $31,792 from the prior year that resulted from the monetization of alternative minimum tax credits on the Company's 2016 Federal income tax return as well as estimated monetization anticipated for 2017. During 2017, the valuation allowance relating to federal alternative minimum tax credits decreased by $154,384 to $12,413 at December 31, 2017. Under the Act, passed on December 22, 2017, the corporate alternative minimum tax was repealed. The Act also provided that existing alternative minimum tax credits are refundable beginning in 2018. As a result, it is now more likely than not that the benefit of CNX's alternative minimum tax credits will be realized. Accordingly, the previously recorded valuation allowance has been released. It should be noted that the Company does have a valuation allowance of $12,413 at December 31, 2017 reflecting the anticipated government sequestration of a portion of monetized alternative minimum tax credits. This amount represents 6.6% of the Company's total alternative minimum tax credits.

Management will continue to assess the potential for realized deferred tax assets based upon income forecast data and the feasibility of future tax planning strategies and may record adjustments to valuation allowances against deferred tax assets in future periods, as appropriate, that could materially impact net income.
    
The following is a reconciliation, stated as a percentage of pretax income, of the United States statutory federal income tax rate to CNX's effective tax rate:
 
For the Years Ended December 31,
 
2017
 
2016
 
2015
 
Amount
 
Percent
 
Amount
 
Percent
 
Amount
 
Percent
Statutory U.S. federal income tax rate
$
41,503

 
35.0
 %
 
$
(204,872
)
 
35.0
 %
 
$
(325,695
)
 
35.0
 %
Uncertain tax positions
27,359

 
23.1

 
1,351

 
(0.2
)
 
—

 
—

Effect of spin on Federal NOL's
24,942

 
21.0

 
—

 
—

 
—

 
—

Accrual to tax return reconciliation
(1,147
)
 
(1.0
)
 
(4,564
)
 
0.8

 
(6,312
)
 
0.7

IRS and state tax examination settlements
—

 
—

 
(13,463
)
 
2.3

 
(36
)
 
—

Net effect of state income taxes
15,538

 
13.1

 
(20,954
)
 
3.6

 
(15,400
)
 
1.7

Effect of change in state valuation allowance
(430
)
 
(0.4
)
 
18,999

 
(3.2
)
 
39,492

 
(4.2
)
Effect of change in federal valuation allowance
(145,772
)
 
(122.9
)
 
184,227

 
(31.5
)
 
25,903

 
(2.8
)
Other deferred adjustments
7,616

 
6.4

 
—

 
—

 
—

 
—

Effect of federal rate reduction
(131,784
)
 
(111.1
)
 
—

 
—

 
—

 
—

Effect of federal tax credits
(19,081
)
 
(16.1
)
 
—

 
—

 
—

 
—

Other
4,798

 
4.0

 
4,873

 
(0.8
)
 
1,689

 
(0.2
)
Income Tax Benefit / Effective Rate
$
(176,458
)
 
(148.9
)%
 
$
(34,403
)
 
6.0
 %
 
$
(280,359
)
 
30.2
 %

On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act which made significant changes that affect CNX. CNX believes that those changes will positively impact its future after-tax earnings, primarily due to the lower U.S. Federal tax rate and the repeal of the corporate alternative minimum tax. Beginning January 1, 2018, CNX will be taxed at a 21% federal corporate tax rate. The Company has reflected the impact of this rate on its deferred tax assets and liabilities at December 31, 2017, as it is required to reflect the change in the period in which the law is enacted. The impact of this change was a net benefit of $115,291 in the income tax provision for the period ended December 31, 2017.

The Act also repealed the corporate alternative minimum tax for tax years beginning after January 1, 2018 and provided that prior alternative minimum tax credits would be refundable. As discussed above, CNX has credits that are expected to be refunded between 2018 and 2021 as a result of the Act and monetization opportunities under current law in 2017. The Company's effective tax rate reflects the release of previously recorded valuation allowances against alternative minimum tax credit carry-forwards of $154,385, including other immaterial changes to valuation, as those credits will now be able to be monetized, net of anticipated sequestration, under the Act.

The Act is a comprehensive tax reform bill containing a number of other provisions that either currently or in the future could impact CNX. The effect of certain limitations effective for the tax year 2018 and forward, specifically related to the deductibility of executive compensation, have been evaluated.

The net benefits for the Act as recorded as provisional amounts as of December 31, 2017, represent the Company's best estimate using information available to the Company as of February 7, 2018. The Company anticipates U.S. regulatory agencies will issue further regulations over the next year which may alter this estimate. The Company is still evaluating, among other things, the application of limitations for executive compensation related to contracts existing prior to November 2, 2017, and provisions in the Act addressing the deductibility of interest expense after January 1, 2018. The Company will refine its estimates to incorporate new or better information as it comes available through the filing date of its 2017 U.S. income tax returns in the fourth quarter of 2018.

A reconciliation of the beginning and ending gross amounts of unrecognized tax benefits is as follows:
 
For the Years Ended
 
December 31,
 
2017
 
2016
Balance at beginning of period
$
9,103

 
$
12,702

Increase in unrecognized tax benefits resulting from tax positions taken during current period
21,902

 
666

Increase in unrecognized tax benefits resulting from tax positions taken during prior periods
7,474

 
—

Reduction in unrecognized tax benefits as a result of the lapse of the applicable statute of limitations
(666
)
 
—

Reduction of unrecognized tax benefits as a result of a settlement with taxing authorities
—

 
(4,265
)
Balance at end of period
$
37,813

 
$
9,103


If these unrecognized tax benefits were recognized, $29,376 and $666 would affect CNX's effective income tax rate for 2017 and 2016, respectively.

CNX and its subsidiaries file income tax returns in the United States and returns within various states and Canadian jurisdictions. With few exceptions, the Company is no longer subject to United States federal, state, local or non-U.S. income tax examinations by tax authorities for the years before 2016.

In 2017, CNX recognized an increase in unrecognized tax benefits of $28,710 for tax benefits resulting from a tax position taken on our federal tax return for the Marginal Well Credit and Consideration of Interest on Depletion in 2016 and plan to take on our 2017 return.

CNX recognizes interest accrued related to unrecognized tax benefits in its interest expense. As of December 31, 2017 and 2016, the Company had an accrued liability of $644 and $306, respectively, for interest related to uncertain tax positions. Interest expense of $337 and $253 was recorded in the Company's Consolidated Statements of Income for the years ended December 31, 2017 and 2016, respectively. During the years ended December 31, 2017 and 2016, CNX paid no interest related to income tax deficiencies.

CNX recognizes penalties accrued related to uncertain tax positions in its income tax expense. As of December 31, 2017 and 2016, CNX had no accrued liabilities for tax penalties.