Income Taxes
The provision (benefit) for income taxes consisted of the following for the years ended December 31:
|
| | | | | | | | | | | |
| 2017 | | 2016 | | 2015 |
Current: | |
| | |
| | |
|
Federal | $ | (92 | ) | | $ | 10,316 |
| | $ | 5,277 |
|
State | 45 |
| | 2,950 |
| | 2,093 |
|
| $ | (47 | ) | | $ | 13,266 |
| | $ | 7,370 |
|
Deferred: | |
| | |
| | |
|
Federal | $ | 6,168 |
| | $ | (11,561 | ) | | $ | 5,258 |
|
State | 2,073 |
| | (2,458 | ) | | (255 | ) |
| $ | 8,241 |
| | $ | (14,019 | ) | | $ | 5,003 |
|
Total provision (benefit) for income taxes | $ | 8,194 |
| | $ | (753 | ) | | $ | 12,373 |
|
The significant components of deferred tax assets and liabilities are as follows at December 31:
|
| | | | | | | |
| 2017 | | 2016 |
Net operating loss and contribution carryforwards | $ | 6,216 |
| | $ | 7,314 |
|
Leases | — |
| | 521 |
|
Accrued expenses | 357 |
| | 550 |
|
Stock-based compensation | 9,061 |
| | 16,911 |
|
Other | 165 |
| | 256 |
|
Interest rate swap | 379 |
| | 66 |
|
Deferred tax assets: | 16,178 |
| | 25,618 |
|
Valuation Allowance | (6,063 | ) | | (135 | ) |
Total deferred tax assets | 10,115 |
| | 25,483 |
|
| | | |
Investment in Joint Ventures | (14,484 | ) | | (20,596 | ) |
Goodwill and intangible amortization | (3,327 | ) | | (4,848 | ) |
Depreciation | (1,257 | ) | | (1,317 | ) |
Interest rate swap | (38 | ) | | — |
|
Total deferred tax liabilities | (19,106 | ) | | (26,761 | ) |
| | | |
Net deferred tax liabilities | $ | (8,991 | ) | | $ | (1,278 | ) |
As of December 31, 2017, the Company has $153 in state loss carryforwards which expire at various dates ending 2033 and $6,063 in charitable contribution carryforwards which expire at various dates ending in 2021. The Company has established a $6,063 valuation allowance for its contributions that are expiring in 2017 as well as all future charitable contributions. The Company believes that future taxable income levels would not be sufficient to realize these charitable contribution tax benefits.
On December 22, 2017, the United States enacted tax reform legislation commonly known as the Tax Cuts and Jobs Act (the “2017 Tax Act”), resulting in significant modifications to existing law. Our financial statements for the year ended December 31, 2017, reflect certain effects of the 2017 Tax Act, which includes a reduction in the corporate tax rate from 35% to 21%. Consistent with Staff Accounting Bulletin No. 118 issued by the Securities and Exchange Commission (“SEC”), which provides for a measurement period of one year from the enactment date to finalize the accounting for effects of the 2017 Tax Act, the Company provisionally recorded an income tax benefit of $1.5 million related to the 2017 Tax Act. In accordance with SEC guidance, provisional amounts may be refined as a result of additional guidance from, and interpretations by, U.S. regulatory and standard-setting bodies, and changes in assumptions. In the subsequent period, provisional amounts will be adjusted for the effects, if any, of interpretative guidance issued after December 31, 2017, by the U.S. Department of the Treasury. The effects of the 2017 Tax Act may be subject to changes for items that were previously reported as provisional amounts, as well as any element of the 2017 Tax Act for which a provisional estimate could not be made, and such changes could be material.
The Company has made provisional computations of the impact of the Tax Cuts and Jobs Act as provided for under SAB 118, including remeasurement of its deferred tax assets and liabilities, and executive compensation limitations under Internal Revenue Code Section 162(m), among others. The Internal Revenue Service is expected to issue additional guidance clarifying provisions of the Act. As additional guidance is issued one or more of the provisional amounts may change.
The income tax expense (benefit) included in the accompanying consolidated statements of operations principally relates to the Company’s proportionate share of the pre‑tax income or loss from its ownership in joint venture subsidiaries. A reconciliation of the federal statutory rate to the Company’s effective tax rate is as follows for the years ended December 31:
|
| | | | | | | | |
| 2017 | | 2016 | | 2015 |
Income tax provision at federal statutory rate | 35 | % | | 35 | % | | 35 | % |
Increase (decrease) in tax resulting from: | |
| | |
| | |
|
State taxes, net of federal benefit | 0.1 | % | | (0.2 | )% | | 1.8 | % |
Noncontrolling interests in passthrough entities | (29.7 | )% | | (35.5 | )% | | (24.6 | )% |
Valuation allowance | 7.1 | % | | 0.2 | % | | — | % |
Other permanent items, net | (2.7 | )% | | (0.4 | )% | | (0.5 | )% |
Effective income tax rate | 9.8 | % | | (0.9 | )% | | 11.7 | % |
The Company and its subsidiaries file U.S. federal income tax returns and various state returns. The Company is no longer subject to U.S. federal, state and local examinations by tax authorities for years before 2011. The Company is currently under audit by the state of Louisiana for the 2013-2015 tax years with no proposed audit adjustments as of December 31, 2017.