Entity information:
9.
Income Tax
 
 
Income tax expense for the years ended
December 31, 2017,
2016,
and
2015
is summarized below (in thousands):
 
   
For the Years Ended December 31,
  
   
2017
    
2016
    
2015
  
Federal income taxes
                        
Current
   $
1,201
     $
1,176
     $
2,552
  
Deferred
    
(9,332
 )    
1,872
      
1,661
  
Total federal tax (benefit) expense
    
(8,131
 )    
3,048
      
4,213
  
State income taxes
                        
Current
    
284
      
308
      
366
  
Deferred
    
(9
 )    
302
      
365
  
Total state tax expense
    
275
      
610
      
731
  
Total income tax (benefit) expense
   $
(7,856
 )   $
3,658
     $
4,944
  
 
Public Law
No:
115
-
97,
also known as the Tax Act, was enacted on
December 22, 2017.
The Tax Act reduces the U.S. federal corporate tax rate from
35%
to a flat rate of
21%.
ASC
740
requires deferred tax assets and liabilities to be remeasured as of the date the Tax Act was enacted based on the rates at which they are expected to reverse in the future, which is generally now
21%.
The Securities and Exchange Commission staff issued Staff Accounting Bulletin (“SAB”)
118,
Income Tax Accounting Implications of the Tax Cuts and Jobs Act
(“SAB
118”
), which provides guidance on accounting for the impact of the Tax Act and states a reasonable estimate of the Tax Act’s effects on the Company’s deferred tax balances should be included in the Company’s consolidated financial statements. Pursuant to the disclosure provisions of SAB
118,
the Company is still analyzing certain aspects of the Tax Act and refining its calculations. The analysis could potentially affect the measurement of these deferred tax balances or give rise to new deferred tax amounts. Based on the Company’s current understanding of the Tax Act, it has made a reasonable estimate of the Tax Act’s effects on the Company’s deferred tax balances. As of
December 31, 2017,
the provisional amount recorded related to the remeasurement of the Company’s deferred tax liability balance was
$9.3
million and reflected a
one
-time reduction in the Company’s income tax provision.
 
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax li
abilities as of
December 31, 2017,
and
2016,
are presented below (in thousands):
 
   
December 31,
  
   
2017
    
2016
  
Deferred tax liabilities:
                
Amortization
   $
(11,058
 )   $
(16,588
 )
Depreciation
    
(8,408
 )    
(11,966
 )
Prepaid expense
    
(151
 )    
(444
 )
State net operating loss carryforwards and adjustments
    
(266
 )    
(279
 )
Other
    
(8
 )    
(13
 )
Total deferred tax liabilities
   $
(19,891
 )   $
(29,290
 )
                 
Deferred tax assets:
                
Deferred compensation
   $
131
     $
232
  
Advance payments
    
520
      
245
  
Bad debt
    
71
      
121
  
Other
    
230
      
412
  
Total net deferred tax assets
   $
952
     $
1,010
  
 
As of
December 31, 2017,
the Company had U.S. federal and state net operating loss carryforwards of
$0
and
$33
thousand, respectively. As of
December 31, 2016,
the Company had U.S. federal and state net operating loss carryforwards of
$0
and
$25
thousand, respectively. The Company had
no
alternative minimum tax credit carryforwards as of
December 31, 2017
, or
December 31, 2016.
The Company establishes valuation allowances when necessary to reduce deferred tax assets to amounts expected to be realized. As of
December 31, 2017,
the Company had
no
valuation allowance recorded. 
 
The effective income tax rates as of
December 31, 2017
,
2016
, and
2015
, were (
184.5
)%
,
41.5%
and
39.8%,
respectively.
 
ASC
740
prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For each yea
r ended
December 31, 2017,
2016
, and
2015,
the Company did
not
identify any material uncertain tax positions. Tax years from
2014
forward remain open for audit.
 
Tot
al income tax expense was different than that computed by applying U.S. federal income tax rates to income before income taxes for the years ended
December 31, 2017,
2016
, and
2015.
The reasons for the differences are presented below (in thousands, except percentages):
 
   
For the Years Ended December 31,
  
   
2017
    
2016
    
2015
  
Federal income tax at statutory rate
    
35
 %    
35
 %    
35
 %
                         
Federal income tax provision at statutory rate
   $
1,491
     $
3,081
     $
4,349
  
State income tax provision, net of federal income tax effects
    
177
      
397
      
475
  
Federal tax rate change
    
(9,336
 )    
—
      
—
  
Other
    
(188
 )    
180
      
120
  
(Benefit) provision for income taxes
   $
(7,856
 )   $
3,658
     $
4,944
  
Effective income tax rate
    
(184.5
 )%    
41.5
 %    
39.8
 %