UNITED STATES LIME & MINERALS INC

(5) Income Taxes

Income tax (benefit) expense for the years ended December 31 is as follows:


	2017		2016		2015
Current income tax expense	$	5,407	$	5,087	$	4,822
Deferred income tax (benefit) expense		(7,612)		777		(227)
Income tax (benefit) expense	$	(2,205)	$	5,864	$	4,595

A reconciliation of income taxes computed at the federal statutory rate to income tax (benefit) expense for the years ended December 31 is as follows:


	2017				2016				2015
			Percent of				Percent of				Percent of
			Pretax				Pretax				Pretax
	Amount		Income		Amount		Income		Amount		Income
Income taxes computed at the federal statutory rate	$	8,730	35.0	%	$	8,266	35.0	%	$	6,118	35.0	%
(Reduction) increase in taxes resulting from:
Benefit of reduced federal income tax rates		(7,447)	(29.9)			—	—			—	—
Statutory depletion in excess of cost depletion		(2,004)	(8.0)			(1,854)	(7.9)			(1,708)	(9.8)
Research & development tax credit		(1,433)	(5.7)			(167)	(0.7)			—	—
Manufacturing deduction		(674)	(2.7)			(666)	(2.8)			(548)	(3.1)
State income taxes, net of federal income tax benefit		235	0.9			202	0.9			309	1.8
Other		388	1.6			83	0.3			424	2.4
Income tax (benefit) expense	$	(2,205)	(8.8)	%	$	5,864	24.8	%	$	4,595	26.3	%

The $7,447 benefit of reduced federal income tax rates resulted from the 2017 Tax Act, which was signed into law on December 22, 2017. The 2017 Tax Act reduced the enacted federal income tax rate for corporations from 35% to 21% beginning in 2018. Applying the lower federal income tax rate to the Company’s book to tax differences resulted in a one-time reduction to the Company’s deferred tax liabilities, net, recorded as an income tax benefit in the Consolidated Statements of Income in 2017. The research and development tax credit in 2017 and 2016 is associated with the ongoing construction of the St. Clair kiln project.

Components of the Company’s deferred tax liabilities and assets are as follows:


	December 31,		December 31,
	2017		2016
Deferred tax liabilities
Lime and limestone property, plant and equipment	$	11,023	$	17,907
Fair value liability of foreign exchange hedges		26		—
Natural gas interests drilling costs and equipment		1,622		2,811
		12,671		20,718
Deferred tax assets
Alternative minimum tax credit carry forwards		—		296
Fair value liability of foreign exchange hedges		—		129
Other		297		461
		297		886
Deferred tax liabilities, net	$	12,374	$	19,832

Current income taxes are classified on the Company’s Consolidated Balance Sheets as follows:


Prepaid expenses and other current assets		$	1,394		$	75

The Company had no federal net operating loss carry forwards at December 31, 2017. The Company reduces deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is “more likely than not” that some portion or all of the deferred tax assets will not be realized. Deferred tax assets are considered fully recognizable because of the Company’s recent income history and expectations of income in the future. The Company’s federal income tax returns for the year ended December 31, 2014 and subsequent years remain subject to examination. The Company’s income tax returns in certain state income tax jurisdictions remain subject to examination for various periods for the year ended December 31, 2014 and subsequent years. The Company treats interest and penalties on income tax liabilities as income tax expense.