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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Taxes |
Income Taxes | (4) Income Taxes The provision (benefit) for income taxes includes the following components (in thousands):
|  | Year ended December 31, |
|  | 2017 |  | 2016 |  | 2015 |
Current tax provision (benefit): |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 5,853 |  | $ | (3,801) |  | $ | 3,801 |
State |  |  | 180 |  |  | 111 |  |  | 1,035 |
|  |  | 6,033 |  |  | (3,690) |  |  | 4,836 |
Deferred tax provision (benefit): |  |  |  |  |  |  |  |  |  |
Federal |  |  | (166,890) |  |  | (77,430) |  |  | 66,430 |
State |  |  | 20,133 |  |  | (6,106) |  |  | 5,239 |
|  |  | (146,757) |  |  | (83,536) |  |  | 71,669 |
Provision (benefit) for income taxes |  | $ | (140,724) |  | $ | (87,226) |  | $ | 76,505 |
The following is a reconciliation between a federal income tax rate of 35% of income (loss) before income taxes and the effective tax rate which is derived by dividing the provision (benefit) for income taxes by income (loss) before for income taxes (in thousands):
|  | Year ended December 31, |
|  | 2017 |  | 2016 |  | 2015 |
Computed provision (benefit) for income taxes at the statutory rate |  | $ | 100,864 |  | $ | (87,084) |  | $ | 68,013 |
Increase (decrease) in income taxes resulting from: |  |  |  |  |  |  |  |  |  |
State income tax provision (benefit), net of federal income tax benefit |  |  | 7,778 |  |  | (5,768) |  |  | 5,416 |
Non-deductible expenses |  |  | 3,230 |  |  | 3,552 |  |  | 3,641 |
Valuation allowance changes affecting the provision for income taxes |  |  | 505 |  |  | 751 |  |  | (899) |
Excess tax benefits from share-based compensation |  |  | (5,377) |  |  | — |  |  | — |
Revaluation of net deferred taxes for the Tax Act |  |  | (246,845) |  |  | — |  |  | — |
Other, net |  |  | (879) |  |  | 1,323 |  |  | 334 |
Provision (benefit) for income taxes |  | $ | (140,724) |  | $ | (87,226) |  | $ | 76,505 |
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was enacted. The Tax Act makes broad and complex changes to the U.S. tax code that may affect our income tax accounting at December 31, 2017 and future periods, including, but not limited to reducing the U.S. federal corporate tax rate from the previous rate of 35% to 21%, requiring companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and creates new taxes on certain foreign sourced earnings. The SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under Accounting Standards Codification 740 (“ASC 740”). In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act. In connection with our initial analysis of the impact of the Tax Act and consistent with the requirement to record a provisional estimate when applicable, the Company made a reasonable estimate of the effects of the Tax Act and recorded a discrete net income tax benefit at December 31, 2017 of approximately $246.8 million. This provisional estimate primarily consists of a net benefit for the corporate rate reduction due to the revaluing of the Company’s net deferred tax liabilities, including certain state related effects, as a result of the reduction in the federal corporate tax rates. The Company made certain estimates in evaluating the Tax Act impact on state income taxes and other deferred tax items. The Company is continuing to gather information and analyze aspects of the Tax Act, which could potentially affect the estimated impact on the deferred tax balances. These estimates may be affected as the Company gains a more thorough understanding of the Tax Act, including the deductibility of purchased assets, state tax treatment, and amounts related to employee compensation. The impact of the Tax Act may differ from our estimates, possibly materially, due to, among other things, changes in interpretations and assumptions the Company has made, guidance that may be issued and actions the Company may take as a result of the Tax Act. The Company will continue to update the provisional estimates as information is obtained, such as state impacts regarding decoupling from the Tax Act provisions, realization of deferred amounts, and accounting method elections that may be made by the Company. For the years ended December 31, 2017, 2016 and 2015 the Company recorded a $0.5 million, $0.8 million and $0.9 million valuation allowance, respectively against certain deferred tax assets primarily associated with ExpressJet state net operating losses with a limited carry forward period. The increase of the valuation allowance was based on changes in state tax laws and the Company's income tax projections which increased the amount of deferred tax assets that are anticipated to expire before the deferred tax assets may be utilized. The Company recorded a $5.4 million benefit from share-based compensation in 2017 relating to ASU 2016-09 which, beginning in 2017, requires excess tax benefits and deficiencies to be recognized in the income tax provision during the period stock options are exercised and when stock awards vest. The significant components of the Company’s net deferred tax assets and liabilities as of December 31, 2017 and 2016 are as follows (in thousands):
|  | As of December 31, |
|  | 2017 |  | 2016 |
Deferred tax assets: |  |  |  |  |  |  |
Intangible asset |  | $ | (206) |  | $ | 4,983 |
Accrued benefits |  |  | 31,651 |  |  | 48,482 |
Net operating loss carryforward |  |  | 122,648 |  |  | 286,389 |
AMT credit carryforward |  |  | 23,443 |  |  | 17,589 |
Deferred aircraft credits |  |  | 53,870 |  |  | 60,415 |
Accrued reserves and other |  |  | 26,853 |  |  | 47,906 |
Total deferred tax assets |  |  | 258,259 |  |  | 465,764 |
Valuation allowance |  |  | (10,642) |  |  | (8,877) |
Deferred tax liabilities: |  |  |  |  |  |  |
Accelerated depreciation |  |  | (666,637) |  |  | (1,022,291) |
Total deferred tax liabilities |  |  | (666,637) |  |  | (1,022,291) |
Net deferred tax liability |  | $ | (419,020) |  | $ | (565,404) |
The Company’s deferred tax liabilities were primarily generated through accelerated depreciation, combined with shorter depreciable tax lives, allowed under the IRS tax code for purchased aircraft and support equipment compared to the Company’s depreciation policy under GAAP for such assets using the straight-line method (see note 1 Nature of Operations and Summary of Significant Accounting Policies). The Company's valuation allowance is related to certain deferred tax assets with a limited carry forward period where the Company does not anticipate utilizing these deferred tax assets prior to the lapse of the carry forward period. At December 31, 2017 and 2016, the Company had federal net operating losses of approximately $491.4 million and $763.9 million and state net operating losses of approximately $302.5 million and $469.2 million, respectively. The estimated effective tax rate applicable to the federal and state net operating losses at December 31, 2017 was 21.0% and 3.36%, respectively. The Company anticipated that the federal and state net operating losses will start to expire in 2034 and 2018, respectively. The Company has recorded a valuation allowance for state net operating losses the Company anticipates will expire before the benefit will be realized due to the limited carry forward periods. As of December 31, 2017 and 2016, the Company also had an alternative minimum tax credit of approximately $23.4 million and $17.6 million, respectively, which does not expire. Under the new the Tax Act, the alternative minimum tax credit is anticipated to be realized by the Company either by offsetting regular tax due or as a refundable credit over the next four years.

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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 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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