16. Income Taxes

Income tax (benefit)/expense from continuing operations consists of the following (in thousands):

	For the Year Ended April 30,
	2018			2017			2016
Current:
Federal	$	5,081		$	61,943		$	48,961
State		1,184			9,349			6,622
Total current		6,265			71,292			55,583
Deferred:
Deferred federal		(9,081	)		(6,969	)		(4,187	)
Deferred state		305			(871	)		(261	)
Total deferred		(8,776	)		(7,840	)		(4,448	)
Total income tax (benefit)/expense	$	(2,511	)	$	63,452		$	51,135

The following table presents a reconciliation of the provision for income taxes from continuing operations at statutory rates to the provision (benefit) in the consolidated financial statements (in thousands):

	For the Year Ended April 30,
	2018			2017			2016
Federal income taxes expected at the statutory rate (a)	$	5,355		$	66,957		$	50,783
State income taxes, less federal income tax benefit		1,460			5,310			4,349
Stock compensation		(322	)		(3,092	)		108
Business meals and entertainment		302			296			233
Domestic production activity deduction		(335	)		(5,728	)		(4,414	)
Research and development tax credit		(426	)		(453	)		(215	)
Change in uncertain tax positions		—			—			(91	)
Other		(403	)		162			382
Federal tax rate change on deferred taxes		(8,142	)		—			—
Total income tax (benefit)/expense	$	(2,511	)	$	63,452		$	51,135

(a)	We had a blended statutory rate of 30.4% in fiscal 2018 because of Tax Reform and a statutory rate of 35% in fiscal 2017 and 2016, respectively.

Deferred tax assets (liabilities) related to temporary differences are the following (in thousands):

	For the Years Ended April 30,
	2018			2017
Non-current tax assets (liabilities):
Net operating loss carryforwards and tax credits	$	3,372		$	2,902
Inventories		6,204			9,325
Accrued expenses, including compensation		3,037			8,194
Environmental reserves		258			279
Product liability		353			515
Accrued promotions		1,061			4,193
Workers' compensation		485			796
Warranty reserve		1,843			2,114
Stock-based compensation		3,576			4,734
State bonus depreciation		1,117			1,049
Property taxes		(160	)		(189	)
Property, plant, and equipment		(18,434	)		(30,017	)
Intangible assets		(12,510	)		(27,032	)
Pension		218			179
Other		21			130
Less valuation allowance		(3,336	)		(2,792	)
Net deferred tax asset/(liability) — total	$	(12,895	)	$	(25,620	)

We had federal net operating loss carryforwards amounting to $216,000 as of April 30, 2018, which expire in fiscal 2020. We obtained $8.2 million in additional loss carryforwards through our acquisition of SWSS on July 20, 2009, the majority of which was utilized in fiscal 2010. Utilization of the remaining losses is limited by Section 382 of the Internal Revenue Code to $108,000 in fiscal 2018 and for each taxable year thereafter. It is possible that future substantial changes in our ownership could occur that could result in additional ownership changes pursuant to Section 382 of the Internal Revenue Code. If such an ownership change were to occur, there could be an annual limitation on the remaining tax loss carryforward.

There were $17.9 million and $17.1 million in state net operating loss carryforwards as of April 30, 2018 and 2017, respectively. The state net operating loss carryforwards will expire between April 30, 2025 and April 30, 2037. There were $3.1 million and $3.2 million of state tax credit carryforwards as of April 30, 2018 and 2017, respectively. The state tax credit carryforwards will expire between April 30, 2020 and April 30, 2026 or have no expiration date.

As of April 30, 2018, valuation allowances of $921,000 and $2.4 million were provided on our deferred tax assets for those state net operating loss carryforwards, and state tax credits, respectively, that we do not anticipate using prior to their expiration. As of April 30, 2017, valuation allowances of $720,000 and $2.1 million were provided on our deferred tax assets for those state net operating loss carryforwards and state tax credits, respectively, that we do not anticipate using prior to their expiration. The increase in the valuation allowance on our deferred tax assets for state net operating losses and credits and other state deferred tax assets related mainly to Massachusetts Investment Tax Credits. No valuation allowances were provided on our deferred federal income tax assets as of April 30, 2018 or 2017, as we believe that it is more likely than not that all such assets will be realized. Recording a valuation allowance or reversing a valuation allowance could have an effect on our future results of operations and financial position.

On December 22, 2017, the U.S. federal government enacted comprehensive tax legislation with Tax Reform, which makes broad and complex changes to the U.S. tax code. Tax Reform significantly revises the corporate federal income tax by, among other things, lowering the corporate federal income tax rate, limiting various deductions, and repealing the domestic manufacturing deduction. We expect to see net benefits from the lower federal tax rate, although there are offsetting effects from other components of Tax Reform.

Tax Reform reduced the U.S. federal statutory income tax rate from 35% to 21% generally effective for tax years beginning on or after January 1, 2018. However, companies with fiscal years that include January 1, 2018 must use a blended rate. Our U.S. federal statutory tax rate will be 21.0% starting in fiscal 2019.

On December 22, 2017, the SEC issued Staff Accounting Bulletin 118, or SAB118, that provides additional guidance allowing companies to use a measurement period, similar to that used in business combinations, to account for the impacts of Tax Reform in their financial statements. In accordance with SAB 118, to the extent that a company’s accounting for certain income tax effects of the Tax Reform is incomplete, but the company is able to determine a reasonable estimate, it must record a provisional estimate in its financial statements. We have accounted for the impacts of Tax Reform to the extent a reasonable estimate could be made during the fiscal year ended April 30, 2018. We will continue to refine our estimates throughout the measurement period or until the accounting is complete.

We estimate the impact of Tax Reform, based on currently available information and interpretations of the law, to be a benefit of $8.7 million. The tax benefit is due to remeasurement of deferred tax assets and liabilities at lower enacted corporate federal tax rates, which did not have a cash impact in fiscal 2018. The actual impact of Tax Reform may differ from this estimate, possibly materially, because of, among other things, changes in interpretations and assumptions we have made, guidance that may be issued, and actions we may take as a result of Tax Reform.

The income tax provisions (benefit) represent effective tax rates of (14.3%) and 33.2% for the fiscal year ended April 30, 2018 and 2017, respectively. The tax benefit in fiscal 2018 was primarily caused by the effect of Tax Reform which resulted in the remeasurement of deferred tax assets and liabilities, as well as lower operating profit. Excluding the impact of Tax Reform and other discrete items, our effective tax rate for the fiscal year ended April 30, 2018 was 35.4%.

At April 30, 2018 and 2017, we did not have any gross tax-effected unrecognized tax benefits.

With limited exception, we are subject to U.S. federal, state, and local, or non-U.S. income tax audits by tax authorities for fiscal years subsequent to April 30, 2014.