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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | Note 5: Income Taxes For the year ended December 31, 2016, the Company recorded net income of approximately $201.7 million. For the year ended December 31, 2015, we recorded a net loss of approximately $61.8 million, and for the year ended December 31, 2014, we recorded net income of approximately $3.1 million. The Company has not recorded an income tax expense or benefit for the years ended December 31, 2016, 2015 or 2014.
|  | 2016 |  |  | 2015 |  |  | 2014 |
Current federal income tax expense |  | $ | — |  |  | $ | — |  |  | $ | — |
Provision for doubtful federal income tax receivable |  |  | — |  |  |  | — |  |  |  | — |
Deferred federal income tax (benefit) expense |  |  | — |  |  |  | — |  |  |  | — |
Federal income tax benefit |  | $ | — |  |  | $ | — |  |  | $ | — |
The items accounting for the difference between income taxes computed at the U.S. federal statutory rate and our effective rate were as follows:
| Year Ended |  |  | Year Ended |  |  | Year Ended |
| December 31, 2016 |  |  | December 31, 2015 |  |  | December 31, 2014 |
Income tax at the federal statutory rate of 35% |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
Effect of: |  |  |  |  |  |  |  |  |  |  |
Dividends on preferred securities |  | 3.4 |  |  | (8.0) |  |  | — |
True-up of deferred assets |  | (0.5 | ) |  |  |  |  |  |  |  |
Adjustments to NOL due to 382 limitation | — |  |  | — |  |  | (9.0) |
Change in valuation allowance | (37.9) |  |  | (27.0) |  |  | (26.0) |
Effective rate | —% |  |  | —% |  |  | —% |
The Company files a consolidated federal income tax return. Pursuant to a tax sharing agreement, WMMRC’s federal income tax liability is calculated on a separate return basis determined by applying 35% to taxable income, in accordance with the provisions of the United States Internal Revenue Code of 1986, as amended (the “Code”), that apply to property and casualty insurance companies. WMIH, as WMMRC’s parent, pays federal income taxes on behalf of WMMRC and settles the federal income tax obligation on a current basis in accordance with the tax sharing agreement. WMMRC made no tax payments to WMIH during the years ended December 31, 2016, 2015 or 2014 associated with the Company’s tax liability from the preceding year. Deferred federal income taxes arise from temporary differences between the valuation of assets and liabilities as determined for financial reporting purposes and income tax purposes. Temporary differences principally relate to discounting of loss reserves, accruals, derivate liabilities, net operating losses, and unrealized gains and losses on investments. As of December 31, 2016, 2015 and 2014, the Company recorded a valuation allowance equal to 100% of the net deferred federal income tax asset due to uncertainty regarding the Company’s ability to realize these benefits in the future. The components of the net deferred tax asset as of December 31, 2016, 2015 and 2014, respectively, are as follows:
| Year Ended |  |  | Year Ended |  |  | Year Ended |
| December 31, 2016 |  |  | December 31, 2015 |  |  | December 31, 2014 |
Deferred federal income tax asset: |  |  |  |  |  |  |  |  |  |  |
Net operating loss carryforward | $ | 2,104,944 |  |  | $ | 2,102,482 |  |  | $ | 2,098,597 |
Accruals and reserves |  | 2,177 |  |  |  | 3,481 |  |  |  | 4,531 |
Derivative liability |  | — |  |  |  | 19,117 |  |  |  | — |
Restricted stock grants |  | 157 |  |  |  | 160 |  |  |  | — |
As filed adjustments |  | — |  |  |  | — |  |  |  | 214 |
Net unrealized loss on investments |  | 23 |  |  |  | 16 |  |  |  | — |
Capital loss carryforward |  | 52,475 |  |  |  | 52,490 |  |  |  | 52,603 |
Total deferred federal income tax asset |  | 2,159,776 |  |  |  | 2,177,746 |  |  |  | 2,155,945 |
Deferred federal income tax liabilities: |  |  |  |  |  |  |  |  |  |  |
Net unrealized gain on investments |  | — |  |  |  | — |  |  |  | 154 |
Losses and loss adjustments expense |  | 500 |  |  |  | 411 |  |  |  | 102 |
Derivative asset |  | 51,407 |  |  |  | — |  |  |  | — |
Total deferred federal income tax liabilities |  | 51,907 |  |  |  | 411 |  |  |  | 256 |
Less: Valuation allowance |  | 2,107,869 |  |  |  | 2,177,335 |  |  |  | 2,155,689 |
Net deferred federal income tax asset | $ | — |  |  | $ | — |  |  | $ | — |
On March 19, 2012, WMIH emerged from bankruptcy. Prior to emergence, WMI abandoned the stock of WMB, thereby generating a worthless stock deduction of approximately $8.37 billion which gives rise to an NOL for the year ended December 31, 2012. Under Section 382 of the Code (“Section 382”), and based on the Company’s analysis, we believe that the Company experienced an “ownership change” (generally defined as a greater than 50% change (by value) in our equity ownership over a three-year period) on March 19, 2012, and our ability to use our pre-change of control NOLs and other pre-change tax attributes against our post-change income was limited. The Section 382 limitation is applied annually so as to limit the use of our pre-change NOLs to an amount that generally equals the value of our stock immediately before the ownership change multiplied by a designated federal long-term tax-exempt rate. Due to applicable limitations under Section 382 and a reduction of tax attributes due to cancellation of indebtedness, a portion of these NOLs were limited and will expire unused. We believe that the total available and utilizable NOL carry forward at December 31, 2016 is approximately $6.0 billion. At December 31, 2016, there was no limitation on the use of these NOLs. These NOLs will begin to expire in 2031. The Company’s ability to utilize the NOLs or realize any benefits related to the NOLs is subject to a number of risks. The Company accounts for uncertain tax positions in accordance with the income tax accounting guidance. The Company has analyzed filing positions in the federal and state jurisdiction where it is required to file tax returns, as well as the open tax years in these jurisdictions. Tax years 2011 to present are subject to examination by the Internal Revenue Service. The Company believes that its federal income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. Therefore, no reserves for uncertain federal income tax positions have been recorded. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the provision for federal income taxes. The Company did not incur any federal income tax related interest income, interest expense or penalties for the years ended December 31, 2016, December 31, 2015 and December 31, 2014.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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