Note 6: Income Taxes



The table below sets forth the income tax benefit related to continuing operations.







The table below reconciles the income tax benefit for continuing operations computed by applying the applicable United States federal income tax rate to the tax benefit computed at the effective income tax rate.





A tax benefit of $6,260 was recorded in 2017.  The benefit was primarily due to deductions associated with the voluntary pension contribution of $20,000, partial release of the valuation allowance and a capital loss on the sale of the Denton Record-Chronicle, of which a portion will be carried back to 2014 for federal income tax purposes.  These deductions offset taxable income that resulted from the sale of the Company’s three properties in downtown Dallas, Texas.



In December 2017, the Tax Cuts and Jobs Act (the “2017 Tax Act”) was enacted. The 2017 Tax Act includes a number of changes to existing U.S. tax laws that impact the Company, most notably a reduction of the U.S. corporate income tax rate from 35 percent to 21 percent for tax years beginning after December 31, 2017. The 2017 Tax Act also provides for the acceleration of depreciation for certain assets placed into service after September 27, 2017 as well as prospective changes beginning in 2018, including repeal of the domestic manufacturing deduction, acceleration of tax revenue recognition, capitalization of research and development expenditures, additional limitations on executive compensation and limitations on the deductibility of interest.



As of December 31, 2017, the Company has completed its accounting for the tax effects of enactment of the 2017 Tax Act, which is reflected in the Company’s 2017 consolidated financial statements. The Company measures deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid. Accordingly, the Company’s deferred tax assets and liabilities were remeasured to reflect the reduction in the U.S. corporate income tax rate from 35 percent to 21 percent, resulting in a $3,570 decrease in income tax benefit for the year ended December 31, 2017.



A tax benefit of $2,272 was recorded in 2016. The benefit was primarily due to deductions associated with capital losses on the sale of certain investments, which were carried back to 2014 for federal income tax purposes.



A tax benefit of $1,570 was recorded in 2015. The benefit was primarily derived from $2,090 of deferred tax liabilities assumed in the acquisition of DMV Holdings, which reduced the amount of valuation allowance that would have otherwise been required. A receivable was recorded in prepaid and other assets as of December 31, 2015, for federal net operating losses of $3,066 generated in 2015. 

The Company made income tax payments, net of refunds, of $583 and $(906) in 2017 and 2016, respectively.  Federal tax benefit recognized in 2017 of $4,073 was recorded within current assets on the Company's Consolidated Balance Sheet as of December 31, 2017. This tax benefit is the result of the sale of the Denton Record-Chronicle in the fourth quarter of 2017. Tax benefits recognized in 2016 were carried back against taxes paid in 2014 for a refund of $3,210 to be received in 2018, which is the result of a tax benefit from the abandonment of the Company's ownership interest in Wanderful and the sale of the Company's equity investment in Homesnap, Inc. in the fourth quarter of 2016. Tax benefits recognized in 2015 were carried back against taxes paid in 2014 for a refund of $2,930 received in 2016.



In accordance with realization requirements of ASC Topic 718,  Stock Compensation, the tax liability and additional paid in capital were reduced in 2015 by $557, for the value of equity compensation in excess of the compensation expense recognized. These deductions were not available to the Company prior to 2014 due to the net operating loss assets.



The table below sets forth the significant components of the Company’s deferred tax liabilities and assets.











The presentation of net deferred tax assets and liabilities for each jurisdiction are presented as noncurrent within the Company’s Consolidated Balance Sheets. Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases and are stated at enacted tax rates expected to be in effect when the taxes are actually paid or recovered. The Company recognizes a valuation allowance for deferred tax assets when it is more-likely-than-not that these assets will not be realized. In making this determination, all positive and negative evidence is considered, including future reversals of existing taxable temporary differences, tax planning strategies, future taxable income and taxable income in prior carryback years. In 2017, it was determined the net operating loss carryforward of $4,260, generated in 2017, was realizable and the Company recorded a deferred tax asset. Additionally in 2017, a reduction of $1,095 was recorded to the valuation allowance to account for other deferred tax assets that were determined to be realizable.



Uncertain tax positions are evaluated and a liability is recognized for the tax benefit associated with uncertain positions only if it is more-likely-than-not that the positions will not be sustained upon examination by taxing authorities, based on the technical merits of the positions. The Company assesses its filing positions in all significant jurisdictions where it is required to file income tax returns for all open tax years. The Company’s federal income tax returns for the years subsequent to December 31, 2014, remain subject to examination, and income tax returns in major state income tax jurisdictions where the Company operates remain subject to examination for various periods subsequent to December 31, 2013. Additionally, the December 2014 return was amended in 2016, extending the statute of limitations associated with the 2014 filing. The Company has recorded a reserve for the tax benefit related to uncertain state tax positions existing as of December 31, 2017.

The table below sets forth a reconciliation of the beginning and ending amount of unrecognized tax benefit.