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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXESFarmer Mac is subject to federal corporate income taxes but is exempt from state and local corporate income taxes. The components of the federal corporate income tax expense for the years ended December 31, 2019, 2018, and 2017 were as follows: Table 10.1
| For the Year Ended December 31, |  |  |  |  |
| 2019 |  | 2018 |  | 2017
| (in thousands) |  |  |  |  |
Current income tax expense |  | $ | 28,316 |  |  | $ | 25,317 |  |  | $ | 43,148 |
Deferred income tax expense |  | 789 |  |  | 2,625 |  |  | 3,221 |
Income tax expense |  | $ | 29,105 |  |  | $ | 27,942 |  |  | $ | 46,369 |
A reconciliation of income tax at the statutory federal corporate income tax rate to the income tax expense for the years ended December 31, 2019, 2018, and 2017 is as follows: Table 10.2
| For the Year Ended December 31, |  |  |  |  |
| 2019 |  | 2018 |  | 2017
| (dollars in thousands) |  |  |  |  |
Tax expense at statutory rate |  | $ | 29,117 |  |  | $ | 28,564 |  |  | $ | 45,740 |
Re-measurement of net deferred tax asset due to enactment of new tax legislation |  | — |  |  | — |  |  | 1,365 |
Excess tax benefits related to stock-based awards |  | (449) |  |  | (946) |  |  | (860) |
Valuation allowance |  | 49 |  |  | — |  |  | 4 |
Other |  | 388 |  |  | 324 |  |  | 120 |
Income tax expense |  | $ | 29,105 |  |  | $ | 27,942 |  |  | $ | 46,369 |
Statutory tax rate |  | 21.0 | % |  | 21.0 | % |  | 35.0 | %
The components of the deferred tax assets and liabilities as of December 31, 2019 and 2018 were as follows: Table 10.3
| As of December 31, |  |  |
| 2019 |  | 2018
| (in thousands) |  |  |
Deferred tax assets: |  |  |  |
Basis differences related to financial derivatives |  | $ | 51,177 |  |  | $ | 7,614 |
Basis differences related to hedged items |  | — |  |  | 1,810 |
Unrealized losses on securities |  | 2,805 |  |  | — |
Allowance for losses |  | 2,650 |  |  | 1,929 |
Unrealized losses on cash flow hedges |  | 1,491 |  |  | — |
Compensation and benefits |  | 819 |  |  | 967 |
Stock-based compensation |  | 571 |  |  | 623 |
Capital loss carryforwards and other-than-temporary impairment |  | 86 |  |  | 36 |
Valuation allowance |  | (86) |  |  | (36) |
Other |  | 88 |  |  | 121 |
Total deferred tax assets |  | 59,601 |  |  | 13,064 |
Deferred tax liability: |  |  |  |
Basis differences related to hedged items | 42,940 |  |  | — |
Unrealized gains on securities | — |  |  | 4,807 |
Unrealized gains on cash flow hedges |  | — |  |  | 1,827 |
Other |  | 151 |  |  | 61 |
Total deferred tax liability |  | 43,091 |  |  | 6,695 |
Net deferred tax asset |  | $ | 16,510 |  |  | $ | 6,369 |
A valuation allowance is required to reduce a deferred tax asset to an amount that is more likely than not to be realized. Future realization of the tax benefit from a deferred tax asset depends on the existence of sufficient taxable income of the appropriate character. After the evaluation of both positive and negative objective evidence regarding the likelihood that its deferred tax assets will be realized, Farmer Mac established a valuation allowance of $86,000 and $36,000 as of December 31, 2019 and 2018, respectively, which was attributable to capital loss carryforwards on investment securities. Farmer Mac did not establish a valuation allowance for the remainder of its deferred tax assets because it believes it is more likely than not that those deferred tax assets will be realized. In determining its deferred tax asset valuation allowance, Farmer Mac considered its taxable income of the appropriate character (for example, ordinary income or capital gain) within the carryback and carryforward periods available under the tax law and the impact of possible tax planning strategies. As of December 31, 2019, no capital loss carryforwards expired. As of December 31, 2019, the amount of capital loss carryforwards was $0.4 million. These capital loss carryforwards will expire in 2024. Deferred tax assets are measured at rates in effect when they arise. To the extent rates change, the deferred tax asset will be adjusted to reflect the new rate. A reduction in corporate tax rates would result in a reduction in the value of the deferred tax asset. The Tax Cuts and Jobs Act was enacted on December 22, 2017. This new legislation provided for significant changes to the U.S. Internal Revenue Code of 1986, as amended, that was in effect through the end of 2017 and included a reduction of the federal corporate income tax rate from 35% to 21%, which became effective January 1, 2018. As a result of this reduction in the federal corporate income tax rate, Farmer Mac re-measured its net deferred tax asset at the newly enacted 21% federal corporate income tax rate and thus reduced its value by $1.4 million. Accordingly, Farmer Mac recorded an increase to income tax expense of $1.4 million, or an increase of 1.04%, in Farmer Mac's effective tax rate for 2017. As of December 31, 2019 and 2018, Farmer Mac did not identify any uncertain tax positions. Farmer Mac did not have any unrecognized tax benefits for the years ended December 31, 2019, 2018, and 2017. Tax years 2017 through 2019 remain subject to examination.

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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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