Entity information:

• Entity registrant name: Cars.com Inc.
• CIK: 0001683606
• SEC filing page: http://www.sec.gov/Archives/edgar/data/1683606/000156459018004522/0001564590-18-004522-index.htm
• XBRL Instance: http://www.sec.gov/Archives/edgar/data/1683606/000156459018004522/cars-20171231.xml
• XBRL Cloud Viewer: https://edgardashboard.xbrlcloud.com/flex/viewer/XBRLViewer.html#instance=http://www.sec.gov/Archives/edgar/data/1683606/000156459018004522/cars-20171231.xml
• EDGAR Dashboard: https://edgardashboard.xbrlcloud.com/edgar-dashboard/?cik=0001683606
• Generator: Donnelley Financial Solutions
• Total assets: 2,511,039,000
• Income tax expense (benefit): -102,281,000
• Found reconcilation from statutory to effective rates: True
• Found income tax policy: Coming soon!

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Note 11. Income Taxes

On February 3, 2017, the Company entered into a Tax Matters Agreement with TEGNA, which governs the tax relationship between the Company and TEGNA for the tax periods through the May 31, 2017 separation of the Company from TEGNA. Under this agreement, TEGNA is responsible for all payments of federal and state income tax due with respect to pre-closing tax liabilities. Accordingly, TEGNA prepared all federal, state and local income tax returns for the pre-closing period.

Pursuant to the Tax Matters Agreement, TEGNA agreed to indemnify the Company for all pre-closing taxes, including any pre-closing taxes resulting from any audit, amendment, other change or adjustment, (ii) any taxes resulting from a breach by TEGNA of any covenant in the Tax Matters Agreement and (iii) any stamp, sales and use, gross receipts, value-added or other transfer taxes imposed on TEGNA on the separation of the Company from TEGNA. Any refund of pre-closing taxes, or other taxes for which TEGNA is responsible are for the benefit of, and will be paid to, TEGNA. The Company agreed to indemnify TEGNA for (i) all post-closing taxes, (ii) any taxes resulting from a breach by the Company of any covenant in the Tax Matters Agreement, (iii) any tax arising from the failure or breach of any representation or covenant made by the Company which failure or breach results in the intended tax consequences of the separation transaction not being achieved, and (iv) any stamp, sales and use, gross receipts, value-added or other transfer tax imposed on the Company on the separation of the Company from TEGNA.

The significant components of the income tax expense (benefit) are as follows (in thousands):

 

 

The income tax provision differed from amounts computed at the statutory federal income tax rate, as follows (in thousands):

 

 

The Company’s effective tax rate for the year ended December 31, 2017 differed from the federal statutory rate of 35% primarily because of the non-cash income tax benefits of $16 million, $51 million and $80 million related to pre-Separation earnings, the write-off of the permanent outside basis difference resulting from the change in the tax status of the Cars.com, LLC flow-through entity and the reduction in the corporate federal income tax rate, respectively.

With the implementation of the post-Separation legal entity structure, the Company was required to record deferred tax assets and liabilities for temporary difference between financial accounting and tax reporting. Accordingly, the Company recorded $246 million of net deferred tax liabilities associated with the outside basis difference in the Cars.com, LLC flow-through entity, with the offset recorded in TEGNA’s investment net.

In October 2017, Cars.com, LLC prospectively changed its corporate structure to convert from being taxed as a partnership to being taxed as a C corporation. As a result of the change in corporate structure, Cars.com, LLC was also required to change its reporting of deferred tax assets and liabilities. During the period, the Company recorded a $51 million non-cash write-off of the permanent outside basis difference resulting from this reporting change.

On December 22, 2017, the Tax Cuts and Jobs Act was enacted into law. The new legislation contains several key tax provisions that will impact the Company, including the reduction of the corporate income tax rate to 21% effective January 1, 2018. The lower corporate income tax rate requires the Company to remeasure its U.S. deferred tax assets and liabilities as well as reassess the realizability of its deferred tax assets and liabilities. The Company recognized a provisional tax benefit of $80 million during the period related to the revaluation of its net deferred tax liabilities, in accordance with ASC 740. The Company continues to evaluate the impacts of the Tax Cuts and Jobs Act and will consider additional guidance from the U.S. Treasury Department, Internal Revenue Service or other standard-setting bodies. Further adjustments, if any, will be recorded by the Company during the measurement period in 2018 as permitted by SEC Staff Accounting Bulletin 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act.

Temporary differences and carryforwards that give rise to deferred tax assets and liabilities at December 31, 2017 and 2016 were as follows (in thousands):

Cars.com files a consolidated U.S. federal income tax return as well as income tax returns in various state and local jurisdictions. The Company's tax returns are routinely audited by federal and state tax authorities and these tax audits are at various stages of completion at any given time. Generally, the Company’s tax returns open to examination by a federal or state taxing authority are for years beginning on or after December 31, 2013.

The Company periodically assesses whether it is more likely than not that it will generate sufficient taxable income to realize its deferred income tax assets. The Company establishes valuation allowances if it is not likely it will realize its deferred income tax assets. In making this determination, the Company considers all available positive and negative evidence and makes certain assumptions. The Company considers, among other things, projected future taxable income, scheduled reversals of deferred tax liabilities, the overall business environment, the Company’s historical financial results and tax planning strategies. In evaluating the likelihood of utilizing the Company’s net deferred income tax assets, the significant factors that the Company considers include (1) the Company’s recent history and forecasted profitability; (2) growth in the U.S. and global economies; and (3) future impact of taxable temporary differences. During 2017, after considering all positive and negative evidence and the four sources of taxable income, the Company concluded that its deferred income tax assets were more likely than not to be realized.

The Company has no unrecognized tax benefits related to uncertain tax positions for the years ended December 31, 2017, 2016 or 2015. The Company does not expect significant increases or decreases in their unrecognized tax benefits within the next 12 months.

There are no material amounts included in the balance at December 31, 2017 for tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.