Gores Holdings II, Inc.

6. Income Taxes

Effective Tax Rate Reconciliation

The effective income tax rate for the year ended December 31, 2017 and December 31, 2016 differs from the expected federal statutory income tax rate of 34% and 35%, respectively. The significant items causing a difference between the statutory federal income tax rate and the Company's effective income tax rate are as follows:


			For the period from
			August 15, 2016
	Year Ended		(inception) to
	December 31,		December 31,
	2017		2016
Federal Statutory Income Tax Rate	$	760,047	$	(14,336)
Permanent Differences		—		—
State Income Taxes, net of Federal Benefit		68,310		(1,229)
Tax Return to Provision True-Up		—		—
Change in Valuation Allowance		(15,564)		15,564
Change in Tax Rate		(2,425)		—
Other		558		—
Net Income Tax Provision (benefit)	$	810,926	$	—

Current/Deferred Taxes

The provision for income taxes consisted of the following for the year ended December 31, 2017 and the year ended December 31, 2016:


			For the period from
			August 15, 2016
	Year Ended		(inception) to
	December 31,		December 31,
	2017		2016
Current Taxes
Federal	$	705,682	$	—
State		100,763		—
Total Current Income Tax Provision	$	806,445	$	—
Deferred Taxes
Federal	$	3,269	$	—
State		1,212		—
Total Deferred Income Tax Provision	$	4,481	$	—
Income Tax Provision (Benefit)	$	810,926	$	—

Deferred Tax Assets and Liabilities

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2017, and December 31, 2016 are as follows:


			For the period from
			August 15, 2016
	Year Ended		(inception) to
	December 31,		December 31,
	2017		2016
Deferred Tax Assets (Liabilities):
Accrued professional fees	$	1,973	$	3,040
Unrealized Gain/Loss on Investments		(6,454)		—
Net operating loss carryforwards		—		12,524
Valuation Allowance		—		(15,564)
Net Deferred Tax Asset (Liability)	$	(4,481)	$	—

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law making significant changes to the Internal Revenue Code. The Act contains reform to the corporate tax law including reducing the corporate tax rate to 21%, eliminating the 2-year carryback for net operating losses, and creating an indefinite carryforward period for the net operating losses limited to 80% of taxable income. Due to the Act, the deferred tax balances were calculated using a federal effective tax rate of 21%.