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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The benefit (provision) for income taxes is comprised of the following:
| For the Years Ended December 31,
(in thousands) | 2018 |  | 2017 |  | 2016
Federal: |  |  |  |  |
Current | $ | (113 | ) |  | $ | 2,200 |  |  | $ | (12 | )
Deferred | 52,367 |  |  | 15,310 |  |  | (3,248 | )
Total Federal | 52,254 |  |  | 17,510 |  |  | (3,260 | )
State: |  |  |  |  |  |  |  |
Current | (2,798 | ) |  | (995 | ) |  | (2,118 | )
Deferred (included in Federal above) | — |  |  | — |  |  | — |
Total State | (2,798 | ) |  | (995 | ) |  | (2,118 | )
Total | $ | 49,456 |  |  | $ | 16,515 |  |  | $ | (5,378 | )
A reconciliation of the benefit (provision) for income taxes to the amount computed at the U.S. Federal statutory rate of 21% for the year ended December 31, 2018 and 35% for the years ended December 31, 2017 and 2016, respectively, is as follows:
| For the Years Ended December 31,
(in thousands) | 2018 |  | 2017 |  | 2016
Tax benefit at U.S. statutory rate | $ | 121,320 |  |  | $ | 205,777 |  |  | $ | 139,657 |
State taxes, net of federal income tax | 21,576 |  |  | 24,891 |  |  | 11,788 |
Valuation allowance | 5,713 |  |  | (246,037 | ) |  | (142,862 | )
Tax credits | 688 |  |  | 1,908 |  |  | 6,163 |
Goodwill impairment | (88,265 | ) |  | (78,515 | ) |  | (10,789 | )
Impact of the Tax Act | (6,042 | ) |  | 114,716 |  |  | — |
Stock compensation | (4,717 | ) |  | (4,093 | ) |  | (5,716 | )
Meals and entertainment | (493 | ) |  | (726 | ) |  | (868 | )
Other, net | (324 | ) |  | (1,406 | ) |  | (2,751 | )
Total | $ | 49,456 |  |  | $ | 16,515 |  |  | $ | (5,378 | )
Significant components of the Company's deferred tax assets and liabilities are as follows:
| As of December 31,
(in thousands) | 2018 |  | 2017
Deferred income tax assets: |  |  |
Capital and financing lease obligations | $ | 165,703 |  |  | $ | 264,255 |
Operating loss carryforwards | 298,255 |  |  | 288,469 |
Deferred lease liability | 63,263 |  |  | 52,869 |
Accrued expenses | 61,309 |  |  | 66,123 |
Tax credits | 50,462 |  |  | 49,556 |
Capital loss carryforward | 41,413 |  |  | — |
Intangible assets | 10,133 |  |  | 14,493 |
Other | 2,872 |  |  | 7,190 |
Total gross deferred income tax asset | 693,410 |  |  | 742,955 |
Valuation allowance | (336,417 | ) |  | (336,087 | )
Net deferred income tax assets | 356,993 |  |  | 406,868 |
Deferred income tax liabilities: |  |  |  |  |
Property, plant and equipment | (334,145 | ) |  | (477,512 | )
Investment in unconsolidated ventures | (41,219 | ) |  | — |
Total gross deferred income tax liability | (375,364 | ) |  | (477,512 | )
Net deferred tax liability | $ | (18,371 | ) |  | $ | (70,644 | )
On December 22, 2017, the President signed into law the Tax Cuts and Jobs Act (“Tax Act”). The Tax Act reformed the United States corporate income tax code, including a reduction to the federal corporate income tax rate from 35% to 21% effective January 1, 2018. The Tax Act also eliminated alternative minimum tax (AMT) and the 20-year carryforward limitation for net operating losses incurred after December 31, 2017, and imposes a limit on the usage of net operating losses incurred after such date equal to 80% of taxable income in any given year. The 80% usage limit will not have an economic impact on the Company until its current net operating losses are either utilized or expired. In addition, the Tax Act limits the annual deductibility of a corporation's net interest expense unless it elects to be exempt from such deductibility limitation under the real property trade or business exception. The Company plans to elect the real property trade or business exception with the 2018 tax return. As such, the Company will be required to apply the alternative depreciation system ("ADS") to all current and future residential real property and qualified improvement property assets. This change reduced the Company's tax depreciation by approximately $57.9 million for the year ended December 31, 2018, and will have a similar impact on future tax depreciation deductions and did impact the Company’s valuation allowance. For the year ended December 31, 2017, reasonable estimates for the Company's state and local provision were made based on the Company's analysis of the Tax Act. On the basis of additional guidance issued by various state taxing authorities, these provisional amounts were adjusted in the year ended December 31, 2018. The Company recognized an additional $6.0 million of valuation allowance against the Company's state net operating losses with a corresponding increase of $6.0 million to the income tax provision. This was primarily due to expiring state net operating losses resulting from certain state taxing authorities not adopting the federal standard of unlimited net operating loss carryovers. A summary of the effect of the Tax Act is as follows:
| For the Year Ended
(in thousands) | December 31, 2017
Rate change - decrease in net deferred tax assets | $ | 108,070 |
Rate change - decrease in valuation allowance | (172,235 | )
Impact on net operating loss usage | (50,551 | )
Reduction of deferred tax asset - AMT credits | 2,361 |
Total impact of the Tax Act on the Company's deferred taxes position | (112,355 | )
Realization of AMT credits | (2,361 | )
Net impact of the Tax Act on the Company's effect tax rate | $ | (114,716 | )
As of December 31, 2018 and 2017, the Company had federal net operating loss carryforwards of approximately $1.2 billion each of which are available to offset future taxable income through 2037. Additionally, as of December 31, 2018, the Company had federal net operating loss carryforwards generated after 2017 of $33.5 million which have an indefinite life, but with usage limited to 80% of taxable income in any given year. The Company had capital loss carryforwards of $165.0 million as of December 31, 2018, which is available to offset future capital gains through 2023. The Company determined that a valuation allowance was required after consideration of the Company's estimated future reversal of existing timing differences as of December 31, 2018 and 2017. For the year ended December 31, 2018, the Company recorded a provision of approximately $0.3 million (including the impact from the Tax Act) to reflect the required valuation allowance of $336.4 million as of December 31, 2018. A summary of the change in the Company's valuation allowance is as follows:
| For the Years Ended December 31,
(in thousands) | 2018 |  | 2017
Increase (decrease) in valuation allowance before consideration of the Tax Act | $ | (5,713 | ) |  | $ | 246,037 |
Increase (decrease) due to the adoption of ASU 2016-09 | — |  |  | 48,531 |
Total increase (decrease) in valuation allowance | (5,713 | ) |  | 294,568 |
Tax Act rate change - decrease in valuation allowance | — |  |  | (172,235 | )
Impact on net operating loss usage | 6,042 |  |  | (50,551 | )
Total increase (decrease) in valuation allowance due to Tax Act | 6,042 |  |  | (222,786 | )
Total increase (decrease) in valuation allowance | $ | 329 |  |  | $ | 71,782 |
The Company has recorded valuation allowances of $245.3 million and $286.6 million as of December 31, 2018 and 2017, respectively, against its federal and state net operating losses, as the Company anticipates these losses will not be utilized prior to expiration. The Company has recorded a valuation allowance against its capital loss carryforward of $41.4 million as of December 31, 2018, as the Company anticipates these losses will not be utilized prior to expiration. The Company also recorded a valuation allowance against federal and state credits of $49.8 million and $49.5 million as of December 31, 2018 and 2017, respectively. For the year ended December 31, 2017, the Company determined that a valuation allowance was required due to the loss before income taxes, combined with the Company's estimated reversal of future timing differences as of December 31, 2017. As a result, the Company recorded an increase to the valuation allowance of $71.8 million for the year ended December 31, 2017. As a part of the change in 2017, the Company increased its valuation allowance by $48.5 million upon the adoption of ASU 2016-09. The $48.5 million offsets the increase to the Company's net operating loss carryforward position previously reflected in an additional paid-in capital pool, and accordingly, did not impact the 2017 income tax position. As of December 31, 2018 and 2017, the Company had gross tax affected unrecognized tax benefits of $18.5 million each of which, if recognized, would result in an income tax benefit recorded in the consolidated statement of operations. Interest and penalties related to these tax positions are classified as tax expense in the Company's consolidated financial statements. Total interest and penalties reserved is $0.1 million as of December 31, 2018 and 2017. As of December 31, 2018, the Company's tax returns for years 2014 through 2017 are subject to future examination by tax authorities. In addition, the net operating losses from prior years are subject to adjustment under examination. The Company does not expect that unrecognized tax benefits for tax positions taken with respect to 2018 and prior years will significantly change in 2019. A reconciliation of the unrecognized tax benefits is as follows:
| For the Years Ended December 31,
(in thousands) | 2018 |  | 2017
Balance at January 1, | $ | 18,461 |  |  | $ | 29,160 |
Additions for tax positions related to the current year | 80 |  |  | 184 |
Reductions for the Impact of the Tax Act | — |  |  | (10,859 | )
Reductions for tax positions related to prior years | (34 | ) |  | (24 | )
Balance at December 31, | $ | 18,507 |  |  | $ | 18,461 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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