NOTE 10 – INCOME TAXES

 

The components of the Company’s United States and foreign provision for income taxes were as follows for the years ended December 31 (in thousands):

 

 

A reconciliation between the effective income tax rate and the United States statutory income tax rate for the years ended December 31, 2017, 2016 and 2015 is as follows (in thousands):

 

 

The increase in the effective tax rate for the year ended December 31, 2017 compared to the year ended December 31, 2016 is primarily the result of a one-time tax benefit related to changes in future tax rates on net deferred tax liabilities as a result of the enactment of the Tax Cuts and Jobs Act (TCJA) in December 2017. The decrease in the effective tax rate for the year ended December 31, 2016 compared to the year ended December 31, 2015 is primarily the result of an increase in nondeductible permanent differences related to driver per diems, nondeductible transaction expenses and the cumulative change in the state income tax rate applied to the beginning net deferred tax liabilities balance.

 

United States Tax Reform

 

On December 22, 2017, the United States government enacted the TCJA comprehensive tax reform legislation. Effective January 2018, the TCJA, among other things, reduces the marginal United States corporate income tax rate from 35% to 21%, limits the deductibility of interest expenses, limits the deduction for net operating losses, eliminates net operating loss carrybacks and modifies or eliminates many business deductions and credits. The TCJA also includes international provisions, which generally establish a territorial-style system for taxing foreign source income of domestic multinational corporations and imposes a mandatory one-time transition tax on undistributed international earnings.

 

Financial statement impacts include adjustments for, among other things, the remeasurement of deferred tax assets and liabilities. United States GAAP accounting for income taxes requires that the Company record the impacts of any tax law change on deferred income taxes in the quarter that the tax law change is enacted. Due to the complexities involved in accounting for the enactment of TCJA, SEC Staff Accounting Bulletin 118 allows the Company to provide a provisional estimate of the impacts of the TCJA in the Company’s earnings for the fourth quarter and year ended December 31, 2017. Accordingly, based on currently available information, the Company was able to reasonably estimate the impact of the TCJA and has recorded a provisional income tax benefit for the reduction in net deferred income tax liabilities of approximately $46.0 million due to the remeasurement of net United States deferred tax liabilities at the lower 21% United States federal corporate income tax rate. Additionally, the Company has reasonably estimated stock compensation and 162(m) limitations and unremitted foreign earnings resulting in no adjustment on a provisional basis.

 

The effects of temporary differences that give rise to significant elements of deferred tax assets and liabilities at December 31, 2017 and 2016 were as follows (in thousands):

 

 

At December 31, 2017, the Company has United States federal and state net operating loss carry forwards of approximately $41.1 million and $69.3 million, respectively, which begin to expire in 2022.

 

The Company had no uncertain tax positions as of December 31, 2017 and 2016. The Company is no longer subject to United States federal income tax examinations by tax authorities for years before 2014. The Company is no longer subject to state income tax examinations by tax authorities for years before 2013.