Entity information:
(Benefit)/Provision for Income Taxes

The components of the provision for income taxes are as follows:
(Benefit)/Provision for income taxes
Fiscal year ended
 
December 31, 2017
December 25, 2016
December 27, 2015
 
53 weeks
52 weeks
52 weeks
Current
 
 
 
Federal
$
44,556

$
71,619

$
2,191

State
6,461

8,746

6,431

Non-U.S.
1,409

883

(327
)
 
52,426

81,248

8,295

Deferred
 
 
 
Federal
(327,002
)
36,213

106,975

State
20,847

12,058

7,452

Non-U.S.
730

(89
)
1,157

 
(305,425
)
48,182

115,584

 
 
 
 
(Benefit)/Provision for income taxes
$
(252,999
)
$
129,430

$
123,879

 
 
 
 
Earnings before income taxes
 
 
 
United States
$
270,598

$
346,865

$
332,020

Non-U.S.
8,624

(6,318
)
4,367

     Total
$
279,222

$
340,547

$
336,387

 
 
 
 
The effective tax rate differs from the federal statutory income tax rate as explained below:
 
 
 
 
Effective Income Tax Rate
 
 
 
 Federal statutory income tax rate
35.0
 %
35.0
 %
35.0
 %
 State income taxes (net of federal benefit)
1.8
 %
4.0
 %
2.7
 %
 Tax effect resulting from international activities
(0.3
)%
0.1
 %
(0.6
)%
 Domestic production activities deduction
(1.5
)%
(1.9
)%
(0.3
)%
 Non-deductible expenses
0.1
 %
0.7
 %
0.3
 %
 Equity based compensation
(4.5
)%
0.0
 %
0.1
 %
 Uncertain tax positions
(0.9
)%
0.0
 %
0.0
 %
 Impact of Tax Cuts and Jobs Act
(119.9
)%
0.0
 %
0.0
 %
 Other
(0.4
)%
0.1
 %
(0.4
)%
Effective income tax rate
(90.6
)%
38.0
 %
36.8
 %

 Deferred Tax Assets and Liabilities
 
 
 
 
December 31, 2017
 
December 25, 2016
 Accrued liabilities
$
6,725

 
$
11,537

 Inventories
9,066

 
11,489

 Benefits and compensation
15,439

 
37,049

 Hedges
—

 
6,511

 Net operating loss carryforwards
53,914

 
81,515

 Federal & state tax credits
1,859

 
2,386

 Postretirement benefits
11,831

 
20,863

 Alternative minimum tax
2,013

 
1,993

 Other
940

 
2,755

 Subtotal
101,787

 
176,098

 Valuation allowance
(1,695
)
 
(3,146
)
Total net deferred tax assets
100,092

 
172,952

 
 
 
 
 Other intangible assets
(632,794
)
 
(964,547
)
 Partnership interests
(6,922
)
 
(10,473
)
 Plant assets
(79,986
)
 
(118,223
)
 Hedges
(1,813
)
 
—

 Other
(1,796
)
 
(2,689
)
Total deferred tax liabilities
(723,311
)
 
(1,095,932
)
 Net deferred tax liability
$
(623,219
)
 
$
(922,980
)
 
 
 
 
 Amounts recognized in the Consolidated Balance Sheets
 
 
 
Long-term net deferred tax assets
614

 
—

Long-term net deferred tax liability
(623,833
)
 
(922,980
)
 Net deferred tax liability
$
(623,219
)
 
$
(922,980
)

Income taxes are accounted for in accordance with the authoritative guidance for accounting for income taxes under which deferred tax assets and liabilities are determined based on the difference between the financial statement basis and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. In the fiscal year ended December 31, 2017, we retrospectively adopted the guidance of ASU 2015-17, “Balance Sheet Classification of Deferred Taxes” (see Note 2 to the Consolidated Financial Statements, Summary of Significant Accounting Policies) and in connection, are presenting all deferred tax asset and liability balances as non-current on our consolidated balance sheet for the fiscal year ended December 31, 2017 and December 25, 2016 in this filing.

The effective tax rate was (90.6)% for the fiscal year ended December 31, 2017 compared to 38.0% for the fiscal year ended December 25, 2016.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into law. Among other provisions, the Act reduced the federal statutory corporate income tax rate from 35% to 21%. We have estimated this rate reduction generated a one-time benefit of 119.9% on our year ended December 31, 2017 provision for income taxes as a result of the revaluation of our deferred tax assets and liabilities at the lower rate. The Company is evaluating the impact of certain foreign income provisions of the Act and we expect the impact of such provisions to not be material. We will treat impact of such provisions, if any, as a period expense beginning in our 2018 fiscal year. Other provisions of the Act did not have a material effect on our year ended December 31, 2017 income tax provision and we do not anticipate such provisions to have a material effect on our financial statements beginning in our 2018 fiscal year.

Further, the Company is still analyzing the other provisions of the Act and refining its calculations, which could potentially impact the measurement of its income tax balances. Once the Company finalizes its analysis and certain additional tax calculations and tax positions, which are subject to complex tax rules and interpretation when it files its 2017 U.S. tax return, it will be able to conclude on any further adjustments to be recorded on these provisional amounts. Any such change will be reported as a component of income taxes in the reporting period in which any such adjustments are determined, which will be no later than the fourth quarter of 2018.

The effective rate for the fiscal year ended December 31, 2017 also includes benefits of approximately 1.5% related to the domestic production activities deduction and 4.5% from share based payments transactions being recorded as an item of continuing operations in accordance with ASU 2016-09, “Improvements to Employee Share-Based Payments Accounting” effective for our 2017 fiscal year (see Note 2 to the Consolidated Financial Statements, Summary of Significant Accounting Policies).

The effective rate for the year ended December 25, 2016 includes benefits of approximately 1.9% related to the domestic production activities deduction. In connection with our acquisition of Boulder Brands, Inc., our effective income tax rate was adversely impacted for the tax effect associated with incurring certain non-deductible acquisition costs and compensation payments of 0.6%, a charge for an increase in our non-current state deferred income tax liability balance of approximately 1.0%, and a charge to record a valuation allowance on our foreign tax credit carryforward of approximately 0.2%.

The Company is a loss corporation as defined by Internal Revenue Code Section 382. Section 382 places an annual limitation on our ability to utilize our NOLs and other attributes to reduce future taxable income. As of December 31, 2017, we have federal NOL carryovers of $408.3 million, subject to an annual limitation of $17.1 million. As a result, $237.2 million of the carryovers exceed the estimated available Section 382 limitation. The Company has reduced its deferred tax assets for this limitation.

The Company's federal NOLs have expiration periods beginning in 2020 through 2027. The Company also has state NOLs that are limited and vary in amount by jurisdiction. Gross state NOLs are approximately $261.0 million with expiration periods beginning in 2018 through 2037. State tax credits are $2.8 million in total and will expire on or before 2022.

The authoritative guidance for accounting for income taxes requires that a valuation allowance is established when it is “more likely than not” that all or a portion of deferred tax assets will not be realized. The Company regularly evaluates its deferred tax assets for future realization. A review of all available positive and negative evidence must be considered, including a company's performance, the market environment in which the company operates, the utilization of past tax credits, length of carryback and carryforward periods, and existing contracts or sales backlog that will result in future profits. Based on a review of both the positive and negative evidence, it was determined that the Company had sufficient positive evidence to outweigh any negative evidence and support that it was more likely that not that substantially all of the deferred tax assets would be realized.

The table below lists the changes in the Company’s deferred tax valuation allowance. The valuation allowance increase of $0.2 million is primarily attributable to state credits, the realization of which is not more likely than not. The decrease of $1.9 million is attributable to the write-off of the deferred tax assets of Boulder Brand’s United Kingdom operations, the release of the foreign tax credit valuation allowance due to tax reform and write-off of expiring state NOLs that were subject to a full valuation allowance.

 
 Beginning
 
 
 
 
 
 
 
 Ending
 
 Balance
 
 Additions
 
Acquisitions
 
Deductions
 
 Balance
Fiscal year ended December 31, 2017
$
3,913

 
$
150

 
$
—

 
$
(1,917
)
 
$
2,146

Fiscal year ended December 25, 2016
2,287

 
1,775

 
59

 
(208
)
 
3,913

Fiscal year ended December 27, 2015
2,288

 
623

 
—

 
(624
)
 
2,287



 
A reconciliation of the beginning and ending amount of gross unrecognized tax positions is as follows:

 
Fiscal year ended
 
December 31, 2017
 
December 25, 2016
 
December 27, 2015
 
53 weeks
 
52 weeks
 
52 weeks
Gross unrecognized tax positions at beginning of year
$
12,104

 
$
8,611

 
$
8,242

Increase for tax positions related to prior periods
858

 
4,225

 
—

Decrease for tax positions related to prior periods
(297
)
 
(444
)
 
—

Increase for tax positions related to the current period
4,080

 
507

 
558

Decrease related to settlement with tax authorities
(593
)
 
(89
)
 
—

Reductions due to lapse of applicable statutes of limitations
(2,537
)
 
(706
)
 
(189
)
Gross unrecognized tax positions at end of year
$
13,615

 
$
12,104

 
$
8,611



The Company's liability for unrecognized tax positions as of December 31, 2017 was $13.6 million, reflecting a net increase of $1.5 million. Net benefit of $2.5 million was recognized in the provision for income taxes resulting primarily from the expiration of statutes of limitations on certain matters offset by an increase in uncertainties related to current year federal matters. The amount that, if recognized, would impact the effective tax rate as of December 31, 2017 would be $7.8 million.

From time to time, various taxing authorities may audit the Company's tax returns. It is reasonably possible that a decrease in the uncertain tax positions of approximately $3.0 to $5.0 million may occur within the next twelve months due to the lapse of certain statutes of limitations or resolution of uncertainties.

The Company recorded a net (benefit) expense for interest and penalties associated with uncertain tax positions of $(0.1) million, $0.4 million and $0.1 million, to the provision for income taxes for the fiscal years ended December 31, 2017, December 25, 2016 and December 27, 2015, respectively. The Company's liability includes accrued interest and penalties of $1.0 million and $1.1 million as of December 31, 2017 and December 25, 2016, respectively.
    
The Company files income tax returns with the U.S. federal government and various state and international jurisdictions. With limited exceptions, the Company's calendar year 2000 and subsequent federal and state tax years remain open by statute, principally relating to NOLs. Audit activity for these years is minimal. With limited exception for certain states, federal and state tax years for pre-acquisition periods of Birds Eye Foods Inc. are either closed by statute or by completed tax examinations. Federal and state tax years for pre-acquisition periods, beginning in 2014, for Boulder Brands are open by statute with no current audit activity. As a matter of course, from time to time various taxing authorities may audit the Company's tax returns and the ultimate resolution of such audits could result in adjustments to amounts recognized by the Company.