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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Tax Disclosure | Income Taxes Federated files a consolidated federal income tax return. Financial statement tax expense is determined under the liability method. Income tax provision consisted of the following expense/(benefit) components for the years ended December 31:
in thousands |  | 2017 |  |  | 2016 |  |  | 2015 |
Current: |  |  |  |  |  |
Federal |  | $ | 106,710 |  |  | $ | 93,538 |  |  | $ | 76,902 |
State |  | 9,446 |  |  | 8,121 |  |  | 6,567 |
Foreign |  | 217 |  |  | 265 |  |  | 188 |
Total Current |  | 116,373 |  |  | 101,924 |  |  | 83,657 |
Deferred: |  |  |  |  |  |
Federal |  | (59,517 | ) |  | 17,057 |  |  | 17,317 |
State |  | 638 |  |  | 597 |  |  | 1,753 |
Foreign |  | (393 | ) |  | (158 | ) |  | 193 |
Total Deferred |  | (59,272 | ) |  | 17,496 |  |  | 19,263 |
Total |  | $ | 57,101 |  |  | $ | 119,420 |  |  | $ | 102,920 |
The reconciliation between the statutory income tax rate and the effective tax rate consisted of the following for the years ended December 31:
|  | 2017 |  |  | 2016 |  |  | 2015 |
Expected federal statutory income tax rate |  | 35.0 | % |  | 35.0 | % |  | 35.0 | %
Increase/(decrease): |  |  |  |  |  |
Federal rate adjustment to deferred taxes 1 |  | (20.2 | ) |  | 0.0 |  |  | 0.0 |
State and local income taxes, net of federal benefit |  | 1.9 |  |  | 1.7 |  |  | 1.8 |
Other |  | (0.3 | ) |  | (0.4 | ) |  | 0.9 |
Effective tax rate (excluding noncontrolling interests) |  | 16.4 |  |  | 36.3 |  |  | 37.7 |
Income attributable to noncontrolling interests |  | (0.2 | ) |  | (1.3 | ) |  | (0.3 | )
Effective tax rate per Consolidated Statements of Income |  | 16.2 | % |  | 35.0 | % |  | 37.4 | %
1 | Represents the impact of revaluing the net deferred tax liability due to the enactment of the Tax Act, and includes the federal tax benefit of any state and local deferred taxes.
The decrease in the effective tax rate for December 31, 2017 as compared to December 31, 2016 was primarily due to the impact of a $70.4 million reduction to the income tax provision resulting from the revaluation of the net deferred tax liability due to the enactment of the Tax Act. The tax effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities consisted of the following at December 31:
in thousands |  | 2017 |  |  | 2016 |
Deferred Tax Assets |  |  |  |  |  |
Tax net operating loss carryforwards |  | $ | 48,722 |  |  | $ | 20,839 |
Compensation related |  | 7,212 |  |  | 12,523 |
Other |  | 2,564 |  |  | 4,119 |
Total deferred tax assets |  | 58,498 |  |  | 37,481 |
Valuation allowance |  | (47,955 | ) |  | (20,419 | )
Total deferred tax asset, net of valuation allowance |  | $ | 10,543 |  |  | $ | 17,062 |
Deferred Tax Liabilities |  |  |  |
Intangible assets |  | $ | 119,885 |  |  | $ | 177,846 |
Property and equipment |  | 5,601 |  |  | 9,481 |
Other |  | 1,926 |  |  | 6,213 |
Total gross deferred tax liability |  | $ | 127,412 |  |  | $ | 193,540 |
Net deferred tax liability |  | $ | 116,869 |  |  | $ | 176,478 |
Long-term deferred tax liability, net at December 31, 2017 decreased $59.1 million from December 31, 2016 primarily due to a $70.4 million reduction resulting from the revaluation of the net deferred tax liability due to the enactment of the Tax Act. As such, Federated's 2017 results include a $70.4 million reduction to the income tax provision resulting from this revaluation. This represents a provisional estimate based on management's initial analysis and interpretation of the legislation. Given the complexity of the legislation, anticipated guidance from the Treasury Department and the potential for additional guidance from the SEC and/or the FASB, this estimate may be adjusted during 2018. The Tax Act's international provisions regarding GILTI and BEAT are not expected to have a material impact on Federated's financial statements. However, this assessment is based on preliminary review and analysis of these provisions and may change as Federated continues its evaluation of these highly complex rules, for which interpretive guidance is needed and expected. In January 2018, the FASB released guidance on the accounting for the GILTI provisions, indicating that a company can elect an accounting policy either to account for the GILTI tax as an expense in the period incurred or to factor the GILTI tax into the measurement of deferred taxes. As Federated requires additional time to evaluate the GILTI provisions and their accounting implications, it has not yet elected its accounting policy with regard to this item. At December 31, 2017, Federated had deferred tax assets related to state and foreign tax net operating loss carryforwards in certain taxing jurisdictions in the aggregate of $48.7 million, of which the state net operating losses will expire through 2037. The state net operating loss carryforwards increased from $18.5 million in 2016 to $46.4 million in 2017 primarily due to a change in Pennsylvania tax law, which removed the $5 million cap on the amount of net operating losses that may be utilized in a given year. Most foreign net operating losses have no expiration period. A valuation allowance has been recognized for $46.4 million (or 100%) of the deferred tax asset for state tax net operating losses, and for $1.6 million (or 68%) of the deferred tax asset for foreign tax net operating losses. The valuation allowances were recorded due to management's belief that it is more likely than not that Federated will not realize the full benefit of these net operating losses. Federated's remaining deferred tax assets as of December 31, 2017 primarily related to compensation-related expenses that have been recognized for book purposes but are not yet deductible for tax purposes. Management believes that it is more likely than not that Federated will receive the full benefit of these deferred tax assets due to the expectation that Federated will generate taxable income well in excess of these amounts in the years they become deductible. At December 31, 2016, Federated had deferred tax assets related to state and foreign tax net operating loss carryforwards in certain taxing jurisdictions in the aggregate of $20.8 million, of which the state net operating losses will expire through 2036. The foreign net operating losses have no expiration period. A valuation allowance has been recognized for $18.4 million (or 100%) of the deferred tax asset for state tax net operating losses, and for $2.0 million (or 85%) of the deferred tax asset for foreign tax net operating losses. The valuation allowances were recorded due to management's belief that it is more likely than not that Federated will not realize the full benefit of these net operating losses. Federated and its subsidiaries file annual income tax returns in the U.S. federal jurisdiction, various U.S. state and local jurisdictions, and in certain foreign jurisdictions. Based upon its review of these filings, there were no material unrecognized tax benefits as of December 31, 2017 or 2016. Therefore, there were no material changes during 2017, and no reasonable possibility of a significant increase or decrease in unrecognized tax benefits within the next twelve months.

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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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