Entity information:
Income Taxes
 
2017
 
2016
 
2015
Income (loss) before taxes
 

 
 

 
 

U.S
$
144,499

 
$
55,189

 
$
103,115

Non-U.S
133

 
(1,414
)
 
(2,878
)
 
$
144,632

 
$
53,775

 
$
100,237


 
Income taxes
 Income tax expense (benefit) consists of:
 
Years Ended December 31,
 
2017
 
2016
 
2015
Current Provision:
 

 
 

 
 

Federal
$
3,682

 
$
6,875

 
$
23,023

State
1,743

 
1,290

 
4,241

Non-U.S
22

 
(71
)
 
(716
)
 
$
5,447

 
$
8,094

 
$
26,548

Deferred Provision:
 

 
 

 
 

Federal
$
(6,824
)
 
$
10,908

 
$
8,372

State
(700
)
 
638

 
1,527

Non-U.S
10

 
(12
)
 
14

 
(7,514
)
 
11,534

 
9,913

 
$
(2,067
)
 
$
19,628

 
$
36,461


The U.S. federal statutory income tax rate is reconciled to the effective income tax rate as follows:
 
Years Ended December 31,
 
2017
 
2016
 
2015
U.S. federal statutory income tax rate
35.0
 %
 
35.0
 %
 
35.0
 %
2017 Act
(36.9
)%
 
—
 %
 
—
 %
U.S. state income taxes
2.6
 %
 
2.3
 %
 
3.7
 %
U.S. state income tax rate change
(1.7
)%
 
—
 %
 
—
 %
Manufacturing incentives
(0.3
)%
 
(1.8
)%
 
(2.6
)%
Tax rate differential on non-U.S. earnings
—
 %
 
0.8
 %
 
0.3
 %
Other, net
(0.1
)%
 
0.2
 %
 
—

 
(1.4
)%
 
36.5
 %
 
36.4
 %

 
On December 22, 2017 the U.S. government enacted significant changes to federal tax law following the passage of the Tax Cuts and Jobs Act (the “2017 Act”). The 2017 Act significantly changes the U.S. corporate tax system. The Company has reasonably estimated the accounting for the effects of the 2017 Act during the year ended December 31, 2017. Our financial statements for the year ended December 31, 2017 reflect certain effects of the 2017 Act including a reduction in the corporate tax rate to 21% from 35% and changes made to executive compensation rules. As a result of these changes to tax laws and tax rates under the 2017 Act, the Company incurred a reduction in income tax expense of $53,424 primarily related to the reduction in the federal corporate tax rate to 21% during the year ended December 31, 2017.

Given the significant changes resulting from and complexities associated with the 2017 Act, the financial impacts for the fourth-quarter and full-year 2017 are provisional and subject to further analysis, interpretation and clarification of the 2017 Act, which could result in changes to these estimates during 2018. The Company will reflect any adjustments to provisional amounts within one year from the enactment date of the 2017 Act, if applicable.
 
The Company’s effective income tax rate for 2017 was lower compared to the U.S. Federal statutory rate of 35% due primarily to the enactment of the 2017 Act and the related remeasurement of deferred tax assets and liabilities. The Company also intends to make certain state tax apportionment elections in 2017 which results in a state income tax rate change that is expected to lower the Company’s overall state tax liability dependent upon the Company achieving minimum employment thresholds in tax years 2017 to 2019.

The Company’s effective income tax rates for 2016 and 2015 were higher compared to the U.S. Federal statutory rate of 35% due primarily to state taxes and, to a lesser extent, losses incurred in foreign jurisdictions with rates lower than the U.S. Federal statutory rate, partially offset by the federal tax credit for research activities and the U.S. manufacturing incentive credits.

During the third and fourth quarters of 2017, the Company adjusted its deferred tax assets and liabilities to account for changes to the September 30, 2016 deferred tax balances related to the separation from Honeywell. The changes were attributable to the completion of Honeywell’s 2016 income tax return and related return to provision adjustment. The adjustment resulted in a $12.5 million decrease in Deferred income taxes and an increase in Additional paid in capital.

For 2017, 2016 and 2015, there were no unrecognized tax benefits recorded by the Company. Although there are no unrecognized income tax benefits, when applicable, the Company’s policy is to report interest expense related to unrecognized income tax benefits in the income tax provision.
 
Deferred tax assets (liabilities)
 
The tax effects of temporary differences which give rise to future income tax benefits and expenses are as follows:
 
December 31,
 
2017
 
2016
Deferred tax assets:
 

 
 

Net Operating Loss
$
74

 
$
12,560

Accruals and Reserves
1,917

 
6,772

Inventory
—

 
215

Pension Obligation
7,251

 
13,086

Equity Compensation
1,052

 
513

Other
—

 
28

Total gross deferred tax assets
10,294

 
33,174

Less: Valuation Allowance
—

 
—

Total deferred tax assets
$
10,294

 
$
33,174

 
 
 
 
Deferred tax liabilities:
 

 
 

Property, plant & equipment
$
(91,985
)
 
$
(145,712
)
Intangibles
(2,487
)
 
(1,262
)
Inventory
(6,461
)
 
—

Other
(1,637
)
 
(400
)
Total deferred tax liabilities
(102,570
)
 
(147,374
)
Net deferred taxes
$
(92,276
)
 
$
(114,200
)

 
The net deferred taxes are primarily related to U.S. operations. As of December 31, 2017, the Company anticipates utilizing its entire federal net operating loss (“NOL”) carryforward from the prior year. The Company has a foreign NOL carryforward of $173 and $213, respectively, at December 31, 2017 and 2016 which is not subject to expiration. We also have remaining state NOL carryforwards of $462 in two jurisdictions at December 31, 2017 and $14,248 at December 31, 2016 most materially in Virginia. The state NOL carryforwards begin to expire in 2037. There were no material tax credit carryforwards at December 31, 2017 or 2016. We believe that the foreign and state NOL carryforwards and other deferred tax assets are more likely than not to be realized and we have not recorded a valuation allowance against the deferred tax assets.
 
As of December 31, 2017 and 2016, there were no undistributed earnings of the Business’ non-U.S. subsidiary and, as such, we have not provided a deferred tax liability for undistributed earnings.