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Income Taxes | 12 Months Ended
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Nov. 30, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income Tax Expense. The components of the income tax expense in our consolidated statements of operations are as follows (in thousands):
| Federal |  | State |  | Total
2017 |  |  |  |  |
Current | $ | (2,800 | ) |  | $ | (3,000 | ) |  | $ | (5,800 | )
Deferred | (86,300 | ) |  | (17,300 | ) |  | (103,600 | )
Income tax expense | $ | (89,100 | ) |  | $ | (20,300 | ) |  | $ | (109,400 | )
2016 |  |  |  |  |
Current | $ | (1,900 | ) |  | $ | (1,000 | ) |  | $ | (2,900 | )
Deferred | (28,700 | ) |  | (12,100 | ) |  | (40,800 | )
Income tax expense | $ | (30,600 | ) |  | $ | (13,100 | ) |  | $ | (43,700 | )
2015 |  |  |  |  |
Current | $ | (1,400 | ) |  | $ | (2,000 | ) |  | $ | (3,400 | )
Deferred | (35,900 | ) |  | (3,100 | ) |  | (39,000 | )
Income tax expense | $ | (37,300 | ) |  | $ | (5,100 | ) |  | $ | (42,400 | )
Our income tax expense for 2017, 2016 and 2015 reflected the favorable net impact of $4.9 million, $15.2 million and $5.6 million, respectively, of federal energy tax credits we earned from building energy-efficient homes, resulting in effective tax rates of 37.7% for 2017, 29.3% for 2016 and 33.4% for 2015. Most of the federal energy tax credits for 2017 and 2016 resulted from legislation enacted in 2015 that extended the availability of a business tax credit for building new energy-efficient homes through December 31, 2016. There has not been any new legislation enacted extending the business tax credit beyond December 31, 2016. Deferred Tax Assets, Net. Deferred income taxes result from temporary differences in the financial and tax basis of assets and liabilities. Significant components of our deferred tax liabilities and assets are as follows (in thousands):
| November 30,
| 2017 |  | 2016
Deferred tax liabilities: |  |  |
Capitalized expenses | $ | 98,147 |  |  | $ | 116,551 |
State taxes | 59,174 |  |  | 65,766 |
Other | 313 |  |  | 286 |
Total | 157,634 |  |  | 182,603 |
Deferred tax assets: |  |  |
NOLs from 2006 through 2017 | 236,273 |  |  | 350,329 |
Tax credits | 208,841 |  |  | 197,766 |
Inventory impairment and land option contract abandonment charges | 139,737 |  |  | 176,555 |
Employee benefits | 100,200 |  |  | 102,321 |
Warranty, legal and other accruals | 60,238 |  |  | 51,448 |
Capitalized expenses | 39,195 |  |  | 36,950 |
Partnerships and joint ventures | 14,784 |  |  | 16,293 |
Depreciation and amortization | 7,333 |  |  | 8,530 |
Other | 8,270 |  |  | 6,196 |
Total | 814,871 |  |  | 946,388 |
Valuation allowance | (23,600 | ) |  | (24,800 | )
Total | 791,271 |  |  | 921,588 |
Deferred tax assets, net | $ | 633,637 |  |  | $ | 738,985 |
Reconciliation of Expected Income Tax Expense. The income tax expense computed at the statutory U.S. federal income tax rate and the income tax expense provided in our consolidated statements of operations differ as follows (dollars in thousands):
| Years Ended November 30,
| 2017 |  | 2016 |  | 2015
| $ |  | % |  | $ |  | % |  | $ |  | %
Income tax expense computed at statutory rate | $ | (101,499 | ) |  | (35.0 | )% |  | $ | (52,260 | ) |  | (35.0 | )% |  | $ | (44,462 | ) |  | (35.0 | )%
Tax credits | 6,227 |  |  | 2.2 |  |  | 4,447 |  |  | 3.0 |  |  | 6,926 |  |  | 5.5 |
Valuation allowance for deferred tax assets | 1,200 |  |  | .4 |  |  | 12,982 |  |  | 8.7 |  |  | 3,356 |  |  | 2.6 |
Depreciation and amortization | 362 |  |  | .1 |  |  | 1,842 |  |  | 1.2 |  |  | 3,183 |  |  | 2.5 |
Basis in unconsolidated joint ventures | 74 |  |  | — |  |  | (86 | ) |  | (.1 | ) |  | 1,617 |  |  | 1.3 |
NOL reconciliation | (2,210 | ) |  | (.8 | ) |  | (3,691 | ) |  | (2.5 | ) |  | (3,379 | ) |  | (2.7 | )
State taxes, net of federal income tax benefit | (14,450 | ) |  | (4.9 | ) |  | (7,511 | ) |  | (5.0 | ) |  | (5,155 | ) |  | (4.1 | )
Other, net | 896 |  |  | .3 |  |  | 577 |  |  | .4 |  |  | (4,486 | ) |  | (3.5 | )
Income tax expense | $ | (109,400 | ) |  | (37.7 | )% |  | $ | (43,700 | ) |  | (29.3 | )% |  | $ | (42,400 | ) |  | (33.4 | )%
Deferred Tax Asset Valuation Allowance. We evaluate our deferred tax assets quarterly to determine if adjustments to our valuation allowance are required based on the consideration of all available positive and negative evidence using a “more likely than not” standard with respect to whether deferred tax assets will be realized. Our evaluation considers, among other factors, our historical operating results, our expectation of future profitability, the duration of the applicable statutory carryforward periods, and conditions in the housing market and the broader economy. In our evaluation, we give more significant weight to evidence that is objective in nature as compared to subjective evidence. Also, more significant weight is given to evidence that directly relates to our then-current financial performance as compared to indirect or less current evidence. The ultimate realization of our deferred tax assets depends primarily on our ability to generate future taxable income during the periods in which the related temporary differences in the financial basis and the tax basis of the assets become deductible. The value of our deferred tax assets in our consolidated balance sheets depends on applicable income tax rates. Our deferred tax assets of $657.2 million at November 30, 2017 and $763.8 million at November 30, 2016 were partially offset by valuation allowances of $23.6 million and $24.8 million, respectively. The deferred tax asset valuation allowances at November 30, 2017 and 2016 were primarily related to certain state NOLs that had not met the “more likely than not” realization standard at those dates. As of November 30, 2017, we would need to generate approximately $1.6 billion of pretax income in future periods before 2038 to realize our deferred tax assets. Based on the evaluation of our deferred tax assets as of November 30, 2017, we determined that most of our deferred tax assets would be realized. In 2017, we reduced our valuation allowance by $1.2 million primarily to account for state NOLs that met the “more likely than not” realization standard. In 2016, we reduced our valuation allowance by $13.0 million, which reflected the expiration of foreign tax credits and the release of a valuation allowance associated with state NOLs that met the “more likely than not” realization standard, partly offset by the establishment of a valuation allowance for state NOLs related to the wind down of our Metro Washington, D.C. operations. In 2015, the valuation allowance was reduced by $3.4 million to account for the expiration of foreign tax credits and state NOLs that were not utilized. We will continue to evaluate both the positive and negative evidence on a quarterly basis in determining the need for a valuation allowance with respect to our deferred tax assets. The accounting for deferred tax assets is based upon estimates of future results. Changes in positive and negative evidence, including differences between estimated and actual results, could result in changes in the valuation of our deferred tax assets that could have a material impact on our consolidated financial statements. Changes in existing federal and state tax laws and corporate income tax rates could also affect actual tax results and the realization of deferred tax assets over time. Certain effects of the federal tax law changes under the TCJA, enacted December 22, 2017, are discussed in Note 24 — Subsequent Event. The majority of the tax benefits associated with our NOLs can be carried forward for 20 years and applied to offset future taxable income. Our federal NOL carryforwards of $105.8 million, if not utilized, will begin to expire in 2031 through 2033. Depending on their applicable statutory period, the state NOL carryforwards of $130.4 million, if not utilized, will begin to expire between 2018 and 2037. State NOL carryforwards of $.5 million expired in 2016. In addition, $112.4 million of our tax credits, if not utilized, will begin to expire in 2026 through 2037. Included in the $112.4 million are $3.2 million of investment tax credits, of which $2.4 million and $.8 million will expire in 2026 and 2027, respectively. Unrecognized Tax Benefits. Gross unrecognized tax benefits are the differences between a tax position taken or expected to be taken in a tax return, and the benefit recognized for accounting purposes. A reconciliation of the beginning and ending balances of gross unrecognized tax benefits, excluding interest and penalties, is as follows (in thousands):
| Years Ended November 30,
| 2017 |  | 2016 |  | 2015
Balance at beginning of year | $ | 56 |  |  | $ | 56 |  |  | $ | 206 |
Reductions due to lapse of statute of limitations | — |  |  | — |  |  | (150 | )
Balance at end of year | $ | 56 |  |  | $ | 56 |  |  | $ | 56 |
W e recognize accrued interest and penalties related to unrecognized tax benefits in our consolidated financial statements as a component of the provision for income taxes. As of each of November 30, 2017, 2016 and 2015, there was a balance of $.1 million of gross unrecognized tax benefits (including interest and penalties) that, if recognized, would affect our effective income tax rate. Our liabilities for unrecognized tax benefits at November 30, 2017 and 2016 are included in accrued expenses and other liabilities in our consolidated balance sheets. As of November 30, 2017 and 2016, there were no tax positions for which the ultimate deductibility is highly certain but the timing of such deductibility is uncertain. Our total accrued interest and penalties related to unrecognized income tax benefits was zero at both November 30, 2017 and 2016. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect our annual effective tax rate, but would accelerate the payment of cash to a tax authority to an earlier period. As of November 30, 2017, our gross unrecognized tax benefits (including interest and penalties) totaled $.1 million. We anticipate that these gross unrecognized tax benefits will decrease by an amount ranging from zero to $.1 million during the 12 months from this reporting date due to the expiration of the applicable statute of limitations. The fiscal years ending 2014 and later remain open to federal examinations, while 2013 and later remain open to state examinations. The benefits of our deferred tax assets, including our NOLs, built-in losses and tax credits would be reduced or potentially eliminated if we experienced an “ownership change” under Section 382. Based on our analysis performed as of November 30, 2017, we do not believe that we have experienced an ownership change as defined by Section 382, and, therefore, the NOLs, built-in losses and tax credits we have generated should not be subject to a Section 382 limitation as of this reporting date.

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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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