

	Year Ended December 31,
(In thousands)	2018			2017		2016
Current provision (benefit)	$	(42,398	)	$	59,122	$	4,546
Deferred provision	120,573			166,527		170,887
Total income tax provision	$	78,175		$	225,649	$	175,433



	Year Ended December 31,
(In thousands)	2018			2017			2016
Provision for income taxes computed at the statutory tax rate	$	143,679		$	121,358		$	169,290
Change in tax resulting from:
Repurchase premium on convertible notes	—			(96		)	9,988
State tax provision (benefit), net of federal impact	5,570			(15,641		)	(8,974		)
Valuation allowance	(1,856		)	18,197			10,663
Remeasurement of net deferred tax assets due to the TCJA	—			102,617			—
Impact related to settlement of IRS Matter	(73,585		)	—			—
Other, net	4,367			(786		)	(5,534		)
Provision for income taxes	$	78,175		$	225,649		$	175,433



	December 31,
(In thousands)	2018		2017
Deferred tax assets:
Accrued expenses	$	17,487	$	30,267
Unearned premiums	34,686		35,035
Differences in fair value of financial instruments	1,115		—
Net unrealized loss on investments	16,297		—
State income taxes	67,069		68,577
Partnership investments	—		47,991
Loss reserves	1,044		1,397
Alternative minimum tax credit carryforward	—		57,086
Goodwill and intangibles	35,068		36,947
Deferred policy acquisition and ceding commission costs	15,288		14,888
Share-based compensation	10,776		10,190
Other	13,091		16,421
Total deferred tax assets	211,921		318,799
Deferred tax liabilities:
Partnership investments	639		—
Differences in fair value of financial instruments	—		3,833
Net unrealized gain on investments	—		6,792
Depreciation	12,201		11,138
Other	2,942		2,446
Total deferred tax liabilities	15,782		24,209
Less: Valuation allowance	64,496		65,023
Net deferred tax asset	$	131,643	$	229,567

On December 22, 2017, H.R.1, the TCJA, was signed into law. In accordance with the provisions of the accounting standard regarding accounting for income taxes, changes in tax rates and tax law are accounted for in the period of enactment, which, for federal legislation, is the date the President signed the bill into law. Effective January 1, 2018, the TCJA, among other things, reduced the federal corporate income tax rate from 35% to 21%, repealed the corporate alternative minimum tax and modified certain limitations on executive compensation. Under GAAP, the effect of tax rate changes on deferred tax balances is recorded as a component of the income tax provision related to continuing operations for the period in which the new tax law is enacted.

Accordingly, in 2017, we recognized a non-cash income tax expense of $102.6 million related to the remeasurement of our net deferred tax assets, which was included as a component of the income tax provision for the year ended December 31, 2017. Additionally, as a result of finalizing our interpretation of related guidance, we completed our accounting in the fourth quarter of 2018 during the one-year measurement period from the enactment date, as provided under Staff Accounting Bulletin No. 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act,” issued by the SEC staff in December 2017. No material adjustments to our provisional amounts were required.

For periods beginning after December 31, 2017, we began realizing a significant reduction in our annualized effective tax rate, before considering Discrete Items, primarily due to the reduction in the federal corporate tax rate from 35% to 21%.

As of December 31, 2018, we recorded a net current income tax receivable of $43.8 million, which primarily relates to the unused portion of our qualified deposits relating to our IRS settlement, partially offset by liabilities of $33.6 million related to applying the standards of accounting for uncertainty in income taxes. We have $2.2 million of U.S. NOL carryforwards, related to our March 2018 acquisition of EnTitle, which is subject to limitation under IRC Section 382. To the extent not utilized, the U.S. NOL carryforwards will expire by tax year 2038. Certain entities within our consolidated group have also generated deferred tax assets of approximately $67.7 million, relating primarily to state and local NOL carryforwards which, if unutilized, will expire during various future tax periods.

We are required to establish a valuation allowance against our deferred tax assets when it is more likely than not that all or some portion of our deferred tax assets will not be realized. At each balance sheet date, we assess our need for a valuation allowance. Our assessment is based on all available evidence, both positive and negative. This requires management to exercise judgment and make assumptions regarding whether our deferred tax assets will be realized in future periods. We have determined that certain non-insurance entities within Radian may continue to generate taxable losses on a separate company basis in the near term and may not be able to fully utilize certain state and local NOLs on their state and local tax returns. Therefore, with respect to deferred tax assets relating to these state and local NOLs and other state timing adjustments, we retained a valuation allowance of $64.5 million at December 31, 2018 and $65.0 million at December 31, 2017.

We currently have a tax benefit preservation plan, together with certain amendments to our amended and restated bylaws and our amended and restated certificate of incorporation (collectively, our “Tax Benefit Preservation Measures”), that was established to protect our ability to utilize our NOLs and other tax attributes by attempting to prevent an “ownership change” under U.S. federal income tax rules. Our Tax Benefit Preservation Measures expire in 2019.

In July 2018, we finalized a settlement with the IRS related to adjustments we had been contesting that resulted from the examination by the IRS of our 2000 through 2007 consolidated federal income tax returns. The IRS opposed the recognition of certain tax losses and deductions that were generated through our investment in a portfolio of non-economic REMIC residual interests and proposed denying the associated tax benefits of these items.

This settlement with the IRS resolved the issues and concluded all disputes related to the IRS Matter. In the three-month period ended June 30, 2018, we recorded tax benefits of $73.6 million, which includes both the impact of the settlement with the IRS as well as the reversal of certain previously accrued state and local tax liabilities. In 2018, under the terms of the settlement, Radian utilized its “qualified deposits” with the U.S. Treasury to settle its $31 million obligation to the IRS, and in 2019, the Company expects the IRS to refund to Radian the remaining $58 million that was previously on deposit. See Note 9 for additional information about these qualified deposits.

As of December 31, 2018, we have $16.6 million of unrecognized tax benefits that would affect the effective tax rate, if recognized. We have no interest or penalty accrued as of December 31, 2018. Our policy for the recognition of interest and penalties associated with uncertain tax positions is to record such items as a component of our income tax provision, of which $2.2 million and $1.8 million were recorded for the years ended December 31, 2017 and 2016, respectively. In 2018, we recorded an income tax benefit of $61.6 million for interest and penalties primarily related to our IRS settlement.



	Year Ended December 31,
(In thousands)	2018			2017
Balance at beginning of period	$	123,951		$	123,028
Tax positions related to the current year:
Increases	5,058			2,343
Tax positions related to prior years:
Increases	26,465			24,122
Decreases	(43,146		)	(1,437		)
Settlements with taxing authorities	(52,353		)	—
Lapses of applicable statute of limitation	(26,423		)	(24,105		)
Balance at end of period	$	33,552		$	123,951