Entity information:
INCOME TAXES
The following table presents the U.S. and non-U.S. components of (loss)/income before income tax (benefit)/expense for the years ended December 31, 2017, 2016, and 2015 (amounts in thousands):
 
For the Fiscal Year Ended
 
December 31,
 
2017
 
2016
 
2015
U.S.
$
(20,685
)
 
$
2,701

 
$
(39,761
)
Non-U.S.
3,598

 
44,541

 
48,188

Total (loss)/income before tax (benefit)/expense
$
(17,087
)
 
$
47,242

 
$
8,427


Income tax (benefit)/expense consisted of (amounts in thousands):
 
For the Fiscal Year Ended
 
December 31,
 
2017
 
2016
 
2015
Current
 
 
 
 
 
Federal
$
(5,765
)
 
$
3,365

 
$
1,136

State
48

 
336

 
172

U.K.
771

 
8,859

 
7,239

Japan
188

 
64

 
127

Australia
571

 
—

 
—

Other non-U.S.
(39
)
 
625

 
169

Total current income tax (benefit)/expense
(4,226
)
 
13,249

 
8,843

Deferred
 
 
 
 
 
Federal
(938
)
 
(276
)
 
(9,889
)
State
(953
)
 
(822
)
 
(1,375
)
U.K.
(1,558
)
 
601

 
(337
)
Singapore
412

 
(2,162
)
 
—

Japan
175

 
(528
)
 
(148
)
Other non-U.S.
233

 
(620
)
 
(545
)
Change in valuation allowance
—

 
326

 
(61
)
Total deferred tax benefit
(2,629
)
 
(3,481
)
 
(12,355
)
Total income tax (benefit)/expense
$
(6,855
)
 
$
9,768

 
$
(3,512
)


Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when such differences are expected to reverse. The Company’s net deferred tax assets are included in Other assets on the Consolidated Balance Sheets.

Significant components of the Company’s deferred tax assets and liabilities were as follows (amounts in thousands):
 
December 31,
 
2017
 
2016
Deferred tax assets
 
 
 
Foreign net operating losses
$
10,474

 
$
10,161

Share-based compensation
1,105

 
1,506

Intangible assets
1,554

 
5,423

Basis difference in property and equipment
3,938

 
5,138

Other
943

 
2,793

Total deferred tax assets
18,014

 
25,021

Valuation allowance
(1,156
)
 
(1,179
)
Total deferred tax assets after valuation allowance
16,858

 
23,842

 
 
 
 
Deferred tax liabilities
 
 
 
Unrealized trading losses
(559
)
 
(4,234
)
Discount on convertible note
(5,601
)
 
(4,727
)
Other
—

 
(181
)
Total deferred liabilities
(6,160
)
 
(9,142
)
Net deferred tax assets
$
10,698

 
$
14,700



The Company has $58.6 million in net operating loss (“NOL”) carry forwards as of December 31, 2017. These NOLs begin to expire in 2020. The Company has a deferred tax asset of $10.5 million relating to these NOLs for which it has established a valuation allowance of $1.0 million. The net change in the valuation allowance is $0.02 million.

The following table reconciles the effective tax rate to the U.S. federal statutory income tax rate:
 
2017
 
2016
 
2015
Federal income tax at statutory rate
35.00
 %
 
35.00
 %
 
35.00
 %
Increase/(decrease) in effective tax rate resulting from:
 
 
 
 
 
State income tax
3.44
 %
 
(0.67
)%
 
(9.25
)%
Foreign rate differential
(52.55
)%
 
8.20
 %
 
(96.96
)%
Deemed dividends
—
 %
 
0.01
 %
 
55.30
 %
Non-deductible transaction costs
—
 %
 
—
 %
 
11.71
 %
Impact of non-controlling interests
1.27
 %
 
(1.59
)%
 
(6.89
)%
Contingent liability
—
 %
 
—
 %
 
(27.92
)%
Foreign losses
—
 %
 
—
 %
 
(19.20
)%
162 (m)
(0.85
)%
 
0.33
 %
 
3.44
 %
GFT carryback
—
 %
 
—
 %
 
(6.58
)%
Uncertain tax positions
26.94
 %
 
2.36
 %
 
19.67
 %
Impairment of investment
—
 %
 
8.36
 %
 
—
 %
Non-taxable dividend
62.44
 %
 
(32.16
)%
 
—
 %
U.K. bank tax
—
 %
 
2.92
 %
 
—
 %
Rate changes
(13.14
)%
 
(1.34
)%
 
—
 %
Toll tax inclusion
(25.96
)%
 
—
 %
 
—
 %
Foreign tax credit
10.28
 %
 
—
 %
 
—
 %
True-ups and deferred tax adjustments
(2.73
)%
 
(2.78
)%
 
—
 %
Other permanent differences
(4.03
)%
 
2.04
 %
 
—
 %
Effective Tax Rate
40.11
 %
 
20.68
 %
 
(41.68
)%


In 2017, the Company had a number of discrete tax items that impacted its effective tax rate:

•
The Company paid inter-company dividends due to internal restructuring of $41.5 million, which are non-taxable in the jurisdictions received.
•
The Company released $4.6 million of income tax contingencies.
•
As a result of the enactment of the “Tax Cuts and Jobs Act” in the U.S. on December 22, 2017 (the "Tax Reform"), the Company: (1) included a provisional $12.6 million of additional income, related to the mandatory deemed repatriation of untaxed foreign earnings, offset by current year losses and a foreign tax credit of $1.7 million; and (2) incurred $2.2 million of tax expense with respect to a DTA revaluation as a result of the change in corporate tax rate from 35% to 21%.
•
The current U.S. tax liability has been estimated using provisional amounts of untaxed foreign earnings. Additionally, the impact of foreign tax credits and the impact on state taxes is provisional. These provisional amounts will be finalized within the measurement period.

At December 31, 2017, as a result of the Tax Reform, the Company has changed its position regarding the repatriation of earnings of its foreign subsidiaries. The Company asserts that the earnings of its foreign subsidiaries will be permanently reinvested in the working capital and other business needs of the subsidiaries to the extent that repatriation of these earnings would trigger additional capital gains and/or foreign withholding taxes. As such, amounts that can be brought back without triggering capital gains and/or foreign withholding taxes will not be considered permanently reinvested. Based on our analysis, we do not believe that the potential impact of the unrecognized deferred tax liability associated with the repatriation of such earnings would be material to the financial statements.

At December 31, 2017, the Company did not have any uncertain tax positions.

The following table summarizes the activity to the gross unrecognized tax benefits from uncertain tax positions (amounts in thousands):

As of December 31,

2017
 
2016
 
2015
Beginning balance as of January 1
$
4,628

 
$
11,801

 
$
10,517

Increases based on tax positions related to the current period
—

 
—

 
885

Increases/(decreases) based on tax positions related to prior periods
(4,331
)
 
(6,617
)
 
429

Decreases related to settlements
(297
)
 
(554
)
 
—

Decreases related to a lapse of applicable statute of limitations
—

 
(2
)
 
(30
)
Ending balance as of December 31
$
—

 
$
4,628

 
$
11,801



Included in the balance of unrecognized tax benefits as of December 31, 2017, December 31, 2016, and December 31, 2015 are $0.0 million, $4.6 million and $11.8 million, respectively, of tax benefits that, if recognized, would affect the effective tax rate. The Company’s open tax years range from 2013 through 2017 for its U.S. federal returns, from 2015 through 2017 for the U.K., from 2012 through 2017 for Japan, and from 2012 through 2017 for its major state jurisdictions. It is reasonably possible that the amount of liability for unrecognized tax benefits could change during the next 12 months due to open examinations. An estimate of the range of the possible change cannot be made until issues are further developed or examinations closed.

In addition to the total unrecognized tax benefits noted above, the Company recorded $0.0 million, $0.9 million, and $1.8 million of penalties and interest for the years ended December 31, 2017, December 31, 2016 and December 31, 2015, respectively. These amounts are recorded in Income tax (benefit)/expense in the Consolidated Statements of Operations and Comprehensive Income and are part of the uncertain tax positions impact when reconciling the federal income tax rate to the Company’s effective tax rate.