8.    INCOME TAXES

 

The provision for income taxes consisted of the following:

 

 

The components of the deferred taxes at December 31, 2017 and 2016 are as follows:

 

 

We have state net operating loss carryforwards aggregating $1,110 at December 31, 2017 representing state tax benefits, net of federal taxes, of approximately $877.  These loss carryforwards are subject to between five,  fifteen, and twenty-year carryforward periods, with $9 expiring after 2018, $6 expiring after 2019, $5 expiring after 2020, $3 expiring after 2021, $3 expiring after 2022 and $1,084 expiring beyond 2022.  We have provided valuation allowances of $745 and $485 at December 31, 2017 and 2016, respectively, against the state tax loss carryforwards, representing the portion of carryforward losses that we believe are not likely to be realized.  The net change in the total valuation allowance reflects a $260,  $102, and $70 increase in 2017, 2016, and 2015, respectively.  The valuation allowance was increased in 2017, 2016, and 2015 to offset the corresponding increase to the deferred tax asset associated with state net operating loss carryforwards.

 

A reconciliation of our 2017, 2016, and 2015 income tax provision to total income taxes at the statutory federal tax rate is as follows:

 

 

On December 22, 2017, the U.S. government enacted comprehensive tax legislation (the “Tax Act”), which significantly revises the ongoing U.S. corporate income tax law by lowering the U.S. federal corporate income tax rate from 35.0% to 21.0%, and setting limitations on deductibility of certain costs.

 

Due to the complexities involved in accounting for the recently enacted Tax Act, the U.S. Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB”) 118 requires that we include in our financial statements the reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined. Accordingly, we recorded a preliminary $7.8 million in estimated tax benefit related to the change in net deferred tax liabilities stemming from the Tax Act’s reduction of the U.S. federal tax rate from 35.0% to 21.0% for the year ended December 31, 2017.

 

The final impact on our financial statements from the Tax Act may differ due to changes in interpretations of the Tax Act, future legislative action to address questions that arise because of the Tax Act, and related interpretations in response to the Tax Act.

 

We file one consolidated U.S. Federal income tax return that includes all of our subsidiaries as well as several consolidated, combined, and separate company returns in many U.S. state tax jurisdictions. The tax years 2013-2016 remain open to examination by the major state taxing jurisdictions in which we file.  The tax years 2014-2016 remain open to examination by the Internal Revenue Service.

 

A reconciliation of unrecognized tax benefits for 2017, 2016, and 2015, is as follows:

 

 

We recognize interest and penalties related to unrecognized income tax benefits as a component of income tax expense, and the corresponding accrual is included as a component of our liability for unrecognized income tax benefits.  During the years ended December 31, 2017, 2016, and 2015, we recognized interest and penalties totaling $0,  $62, and $110, respectively.  At December 31, 2017 and 2016, accrued interest aggregated $481 and $693, respectively, and accrued penalties aggregated $93 and $171, respectively.  As of December 31, 2017 and 2016, all unrecognized tax benefits and the related interest and penalties, if recognized, would favorably affect our effective tax rate.

 

We do not anticipate that total unrecognized tax benefits will change significantly due to the settlement of audits, expiration of statutes of limitations, or other reasons in the next twelve months.