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INCOME TAXES | 12 Months Ended
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Dec. 31, 2016
INCOME TAXES |
11. | INCOME TAXES
As discussed in Note 1, the Company began operating in compliance with REIT requirements for federal income tax purposes effective January 1, 2013. As a REIT, the Company must distribute at least 90 percent of its taxable income (including dividends paid to it by its TRSs) and will not pay federal income taxes on the amount distributed to its stockholders. In addition, the Company must meet a number of other organizational and operational requirements. It is management’s intention to adhere to these requirements and maintain the Company’s REIT status. Most states where CoreCivic holds investments in real estate conform to the federal rules recognizing REITs. Certain subsidiaries have made an election with the Company to be treated as TRSs in conjunction with the Company’s REIT election; the TRS elections permit CoreCivic to engage in certain business activities in which the REIT may not engage directly. A TRS is subject to federal and state income taxes on the income from these activities and therefore, CoreCivic includes a provision for taxes in its consolidated financial statements. Income tax expense is comprised of the following components (in thousands):
|  | For the Years Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
Current income tax expense |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 10,181 |  |  | $ | 2,519 |  |  | $ | 9,326 |
State |  |  | 1,983 |  |  |  | 136 |  |  |  | 828 |
|  |  | 12,164 |  |  |  | 2,655 |  |  |  | 10,154 |
Deferred income tax expense (benefit) |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (3,400 | ) |  |  | 5,589 |  |  |  | (2,280 | )
State |  |  | (511 | ) |  |  | 117 |  |  |  | (931 | )
|  |  | (3,911 | ) |  |  | 5,706 |  |  |  | (3,211 | )
Income tax expense |  | $ | 8,253 |  |  | $ | 8,361 |  |  | $ | 6,943 |
Significant components of CoreCivic’s deferred tax assets and liabilities as of December 31, 2016 and 2015, are as follows (in thousands):
|  | December 31, |
|  | 2016 |  |  | 2015 |
Noncurrent deferred tax assets: |  |  |  |  |  |  |  |
Asset reserves and liabilities not yet deductible for tax |  | $ | 29,198 |  |  | $ | 28,589 |
Tax over book basis of certain assets |  |  | 866 |  |  |  | 893 |
Net operating loss and tax credit carryforwards |  |  | 5,487 |  |  |  | 5,287 |
Intangible contract value |  |  | 2,570 |  |  |  | 2,717 |
Other |  |  | 346 |  |  |  | 460 |
Total noncurrent deferred tax assets |  |  | 38,467 |  |  |  | 37,946 |
Less valuation allowance |  |  | (3,436 | ) |  |  | (3,780 | )
Total noncurrent deferred tax assets |  |  | 35,031 |  |  |  | 34,166 |
Noncurrent deferred tax liabilities: |  |  |  |  |  |  |  |
Book over tax basis of certain assets |  |  | (9,386 | ) |  |  | (15,238 | )
Intangible lease value |  |  | (8,368 | ) |  |  | (8,862 | )
Other |  |  | (3,542 | ) |  |  | (242 | )
Total noncurrent deferred tax liabilities |  |  | (21,296 | ) |  |  | (24,342 | )
Net total noncurrent deferred tax assets |  | $ | 13,735 |  |  | $ | 9,824 |
The tax benefits associated with equity-based compensation reduced income taxes payable by $1.5 million, $0.5 million, and $0.7 million during 2016, 2015, and 2014, respectively. Such benefits were recorded as increases to stockholders’ equity. A reconciliation of the income tax provision at the statutory income tax rate and the effective tax rate as a percentage of income from continuing operations before income taxes for the years ended December 31, 2016, 2015, and 2014 is as follows:
|  | 2016 |  |  | 2015 |  |  | 2014 |
Statutory federal rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
Dividends paid deduction |  |  | (32.5 | ) |  |  | (31.9 | ) |  |  | (31.1 | )
State taxes, net of federal tax benefit |  |  | 1.1 |  |  |  | 0.9 |  |  |  | 0.8 |
Permanent differences |  |  | 0.3 |  |  |  | 0.4 |  |  |  | 0.1 |
Other items, net |  |  | (0.3 | ) |  |  | (0.8 | ) |  |  | (1.4 | )
|  |  | 3.6 | % |  |  | 3.6 | % |  |  | 3.4 | %
CoreCivic’s effective tax rate was 3.6%, 3.6%, and 3.4% during 2016, 2015, and 2014, respectively. As a REIT, CoreCivic is entitled to a deduction for dividends paid, resulting in a substantial reduction in the amount of federal income tax expense it recognizes. Substantially all of CoreCivic’s income tax expense is incurred based on the earnings generated by its TRSs. CoreCivic’s overall effective tax rate is estimated based on its current projection of taxable income primarily generated in its TRSs. The Company’s consolidated effective tax rate could fluctuate in the future based on changes in estimates of taxable income, the relative amounts of taxable income generated by the TRSs and the REIT, the implementation of additional tax planning strategies, changes in federal or state tax rates or laws affecting tax credits available to the Company, changes in other tax laws, changes in estimates related to uncertain tax positions, or changes in state apportionment factors, as well as changes in the valuation allowance applied to the Company’s deferred tax assets that are based primarily on the amount of state net operating losses and tax credits that could expire unused. CoreCivic had no liabilities for uncertain tax positions as of December 31, 2016 and 2015. CoreCivic recognizes interest and penalties related to unrecognized tax positions in income tax expense. CoreCivic does not currently anticipate that the total amount of unrecognized tax positions will significantly change in the next twelve months. CoreCivic had an income tax receivable of $8.8 million and $21.2 million as of December 31, 2016 and 2015, respectively, representing overpayment of federal income tax, which is included in prepaid expenses and other current assets in the accompanying consolidated balance sheets. CoreCivic’s U.S. federal income tax returns for tax years 2013 through 2015 remain subject to examination by the Internal Revenue Service (“IRS”). The IRS completed an audit during the first quarter of 2016 of one of the Company’s TRSs for the year ended December 31, 2013 with no material adjustments. All states in which CoreCivic files income tax returns follow the same statute of limitations as federal, with the exception of the following states whose open tax years include 2012 through 2015: Arizona, California, Colorado, Kentucky, Minnesota, New Jersey, Texas, and Wisconsin.

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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 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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