Entity information:
F. Income Taxes

For the calendar years 2017, 2016 and the month of December 2015, AC and its greater than 80% owned subsidiaries file a consolidated federal income tax return. Accordingly, the income tax provision represents the aggregate of the amount provided for all companies.

Prior to the spin-off, the operations of the Company’s subsidiaries are included in the consolidated U.S. federal and certain state and local income tax returns of GAMCO for the first eleven months of the 2015. For this period, the Company filed a consolidated U.S. federal and certain state and local income tax returns for the last month of 2015. The Company’s subsidiaries’ federal and certain state and local income taxes were calculated as if the Company’s subsidiaries filed on a separate return basis, and the amount of current and deferred tax or benefit is either remitted to or received from GAMCO.

The provision for income taxes for the years ended December 31, 2017, 2016 and 2015 consisted of the following:
 
  
2017
  
2016
  
2015
 
(In thousands)
         
Federal:
         
Current
 
$
781
  
$
5,018
  
$
4,540
 
Deferred
  
(3,137
)
  
(1,231
)
  
(6,160
)
State and local:
            
Current
  
(33
)
  
236
   
225
 
Deferred
  
(31
)
  
(147
)
  
(290
)
Total
 
$
(2,420
)
 
$
3,876
  
$
(1,685
)
 
A reconciliation of the Federal statutory rate to the effective tax rate is set forth below:
 
  
2017
  
2016
  
2015
 
Statutory Federal income tax rate
  
34.0
%
  
34.0
%
  
34.0
%
State income tax, net of Federal benefit
  
(1.3
)
  
1.2
   
1.6
 
Dividends received deduction
  
(8.0
)
  
(3.6
)
  
26.4
 
Donation of appreciated securities
  
(21.5
)
  
(4.5
)
  
3.2
 
Revaluation of net deferred tax liabilities due to tax reform
  
(26.5
)
  
-
   
-
 
Accelerated vesting of restricted stock awards
  
(14.5
)
  
-
   
-
 
Noncontrolling interests
  
(0.9
)
  
(0.7
)
  
-
 
Other
  
0.1
   
0.6
   
0.2
 
Effective income tax rate
  
-38.6
%
  
27.0
%
  
65.4
%
 
U.S. federal legislation commonly referred to as the Tax Cuts and Jobs Act reduced the corporate income tax rate from a maximum of 35% to 21% beginning in 2018. As a result, the Company revalued its deferred tax assets and liabilities in December 2017. The income tax provision for the year ended December 31, 2017 reflects a benefit of $1.7 million due to this revaluation. This benefit, which was based on reasonable estimates, may require future adjustment for a variety of factors including the receipt of additional information from investment funds, changes in the Company’s assumptions, and/or the availability of further guidance and interpretations.

Significant components of our deferred tax assets and liabilities are as follows:
 
  
2017
  
2016
 
(In thousands)
      
Deferred tax assets:
      
Stock-based compensation expense
 
$
19
  
$
719
 
Deferred compensation
  
987
   
1,315
 
Shareholder-designated contribution carryover
  
1,765
   
1,461
 
Other
  
3
   
4
 
Total deferred tax assets
  
2,774
   
3,499
 
Deferred tax liabilities:
        
Investments in securities and partnerships
  
(6,165
)
  
(7,451
)
Other liabilities
  
(12
)
  
-
 
Total deferred tax liabilities
  
(6,177
)
  
(7,451
)
Net deferred tax liabilities
 
$
(3,403
)
 
$
(3,952
)
 
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits related to uncertain tax positions is as follows:
 
  
(in thousands)
 
Balance at January 1, 2015
 
$
57
 
Additions based on tax positions related to the current year
  
(60
)
Additions for tax positions of prior years
  
-
 
Reductions for tax positions of prior years
  
(2
)
Settlements
  
(11
)
Balance at December 31, 2015
  
(16
)
Additions based on tax positions related to the current year
  
-
 
Additions for tax positions of prior years
  
126
 
Reductions for tax positions of prior years
  
(10
)
Settlements
  
-
 
Balance at December 31, 2016
  
100
 
Additions based on tax positions related to the current year
  
-
 
Additions for tax positions of prior years
  
-
 
Reductions for tax positions of prior years
  
(89
)
Settlements
  
-
 
Balance at December 31, 2017
 
$
11
 
 
The Company records penalties and interest related to tax uncertainties in income taxes. As of December 31, 2017, 2016 and 2015, the Company’s had gross unrecognized tax benefits (liabilities) of $10,923, $100,149 and ($15,678), respectively, of which $8,629, $66,098 and ($10,347), respectively, if recognized, would impact the Company’s effective tax rate. The Company has accrued liabilities of $6,241 and $94,428 as of December 31, 2017 and 2016, respectively, for interest and penalties. These amounts are included in accrued expenses and other liabilities on the consolidated statements of financial condition.

Under the Company’s Tax Indemnity and Sharing Agreement with GAMCO, GAMCO is liable for all income taxes of the Company for periods prior to the spin-off from GAMCO. The Company is not currently under audit by any tax jurisdiction. The Company is subject to Federal and state audits for tax years after 2014.