INCOME TAXES

Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities are provided to record the effects of temporary differences between the tax basis of an asset or liability and its amount as reported in our consolidated balance sheets. These temporary differences result in taxable or deductible amounts in future years.

The components comprising our deferred tax assets and liabilities are as follows:



	December 31,
(In thousands)	2018			2017
Deferred tax assets
Federal net operating loss carryforwards	$	102,806		$	110,350
State net operating loss carryforwards	55,478			45,096
Share-based compensation	15,127			14,226
Other	53,434			35,161
Gross deferred tax assets	226,845			204,833
Valuation allowance	(39,516		)	(28,821		)
Deferred tax assets, net of valuation allowance	187,329			176,012

Deferred tax liabilities
Difference between book and tax basis of property and intangible assets	259,495			219,090
State tax liability	38,891			33,777
Other	10,205			9,802
Gross deferred tax liabilities	308,591			262,669
Deferred tax liabilities, net	$	121,262		$	86,657

At December 31, 2018, we have unused federal general business tax credits of approximately $11.3 million which may be carried forward or used until expiration beginning in 2031 and alternative minimum tax credits of $11.0 million which may be used or refunded through 2022. We have a federal income tax net operating loss of approximately $489.6 million, which may be carried forward or used until expiration beginning in 2033, assuming no significant change in ownership. We also have state income tax net operating loss carryforwards of approximately $936.5 million, which may be used to reduce future state income taxes. The state net operating loss carryforwards will expire in various years ranging from 2019 to 2038, if not fully utilized.

On December 22, 2017, the U.S. government enacted the Tax Act. As part of our analysis of the impact of the Tax Act, we recorded a discrete net tax benefit of $60.1 million in the period ending December 31, 2017. The tax benefit was due to the corporate federal tax rate reduction on our net deferred tax liability.

Valuation Allowance on Deferred Tax Assets

Management assesses available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. In evaluating our ability to recover deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies and results of recent operations.

We have maintained a valuation allowance of $39.5 million against certain federal and state deferred tax assets as of December 31, 2018 due to uncertainties related to our ability to realize the tax benefits associated with these assets. In assessing the need to establish a valuation allowance, we consider, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of profitability and taxable income, the duration of statutory carryforward periods, our experience with the utilization of operating loss and tax credit carryforwards before expiration and tax planning strategies. Valuation allowances are evaluated periodically and subject to change in future reporting periods as a result of changes in the factors noted above.

Provision (Benefit) for Income Taxes

A summary of the provision (benefit) for income taxes is as follows:



	Year Ended December 31,
(In thousands)	2018			2017			2016
Current
Federal	$	(584	)	$	(10,367	)	$	—
State	5,897			5,335			1,242
Total current taxes provision	5,313			(5,032		)	1,242
Deferred
Federal	29,434			6,449			(192,472		)
State	5,584			1,698			(8,703		)
Total deferred taxes benefit	35,018			8,147			(201,175		)
Provision (benefit) for income taxes from continuing operations	$	40,331		$	3,115		$	(199,933	)

Provision (benefit) for income taxes included on the consolidated statement of operations
Provision (benefit) for income taxes from continuing operations	$	40,331		$	3,115		$	(199,933	)
Provision (benefit) for income taxes from discontinued operations	136			14,855			146,379
Provision (benefit) for income taxes from continuing and discontinued operations	$	40,467		$	17,970		$	(53,554	)

Our tax provision for the year ended December 31, 2018 was unfavorably impacted by state taxes and certain nondeductible expenses which were partially offset by utilization of tax credits.

Our tax provision for the year ended December 31, 2017 was favorably impacted by the federal statutory tax rate change applied to our net deferred tax liability. Based on this revaluation, we have recorded a discrete tax benefit of $60.1 million.

Our tax benefit for the year ended December 31, 2016 resulted from the release of a valuation allowance on our federal and state net operating loss carryforwards and other deferred tax assets.

As part of our review in determining the need for a valuation allowance, we assess the potential release of existing valuation allowances. In 2016, we determined that the positive evidence in favor of releasing the valuation allowance, particularly evidence that was objectively verifiable, outweighed the negative evidence. We utilize a rolling twelve quarters of pretax income adjusted for permanent book to tax differences as a measure of cumulative results in recent years. We transitioned from a cumulative loss position to a cumulative income position over the rolling twelve quarters during 2016. Other evidence considered in the analysis included, but was not limited to, a trend reflective of improvement in recent earnings, forecasts of profitability and taxable income and the reversal of existing temporary differences. The change in these conditions during 2016 provided positive evidence that supported the release of the valuation allowance against a significant portion of our deferred tax assets. As such, we concluded that it was more likely than not that the benefit from these deferred tax assets would be realized. As a result, during the year ended December 31, 2016, we released $201.5 million of valuation allowance on our federal and state income tax net operating loss carryforwards and other deferred tax assets.

The following table provides a reconciliation between the federal statutory rate and the effective income tax rate, expressed as a percentage of income from continuing operations before income taxes:



	Year Ended December 31,
	2018		2017		2016
Tax at federal statutory rate	21.0	%	35.0	%	35.0	%
Federal statutory rate change on deferred tax liability	—	%	(35.2	)%	—	%
State income taxes, net of federal benefit	5.9	%	2.7	%	(60.8	)%
Compensation-based credits	(1.9	)%	(1.0	)%	(22.3	)%
Valuation allowance for deferred tax assets	—	%	—	%	(2,548.1	)%
Nondeductible expenses	0.7	%	0.5	%	10.6	%
Tax exempt interest	(0.2	)%	(0.3	)%	(7.1	)%
Company provided benefits	0.1	%	0.5	%	15.2	%
Other, net	0.4	%	(0.4	)%	3.7	%
Effective tax rate	26.0	%	1.8	%	(2,573.8	)%

Status of Examinations

We generated net operating losses on our federal income tax returns for years 2011 through 2013. These returns remain subject to federal examination until the statute of limitations expires for the year in which the net operating losses are utilized.

We are also currently under examination for various state income and franchise tax matters. As it relates to our material state returns, we are subject to examination for tax years ended on or after December 31, 2001, and the statute of limitations will expire over the period September 2019 through October 2022.

We believe that we have adequately reserved for any tax liability; however, the ultimate resolution of these examinations may result in an outcome that is different than our current expectation. We do not believe the ultimate resolution of these examinations will have a material impact on our consolidated financial statements.

Other Long-Term Tax Liabilities

The impact of an uncertain income tax position taken in our income tax return is recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position is not recognized if it has less than a 50% likelihood of being sustained. Our liability for uncertain tax positions is recorded as other long-term tax liabilities in our consolidated balance sheets.

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



	Year Ended December 31,
(In thousands)	2018		2017		2016
Unrecognized tax benefit, beginning of year	$	2,482	$	2,482	$	2,482
Additions:
Tax positions related to current year	—		—		—
Reductions:
Tax position related to prior years	—		—		—
Unrecognized tax benefits, end of year	$	2,482	$	2,482	$	2,482

Included in the $2.5 million balance of unrecognized tax benefits at December 31, 2018, are $2.0 million of federally tax effected benefits that, if recognized, would impact the effective tax rate. We recognize interest related to unrecognized tax benefits in our income tax provision. During the year ended December 31, 2018, we recognized interest and penalties of approximately $0.1 million in our tax provision. We have accrued $1.0 million of interest and penalties at both December 31, 2018 and 2017 in our consolidated balance sheets.

We do not anticipate any material changes to our unrecognized tax benefits over the next twelve-month period.