Income Taxes

We file a consolidated federal income tax return, consolidated unitary returns in certain states, and other separate state income tax returns for certain of our subsidiary companies.

The provision for income taxes from continuing operations consisted of the following:



	For the years ended December 31,
(in thousands)	2017			2016			2015

Current:
Federal	$	215		$	904		$	279
State and local	(963		)	(1,628		)	(3,588		)
Total current income tax provision	(748		)	(724		)	(3,309		)
Deferred:
Federal	(16,602		)	31,029			(30,546		)
State and local	(2,704		)	2,961			(4,029		)
Total deferred income tax provision	(19,306		)	33,990			(34,575		)
Provision (benefit) for income taxes	$	(20,054	)	$	33,266		$	(37,884	)

The difference between the statutory rate for federal income tax and the effective income tax rate was as follows:



	For the years ended December 31,
	2017		2016		2015

Statutory rate	35.0	%	35.0	%	35.0	%
Effect of:
State and local income taxes, net of federal tax benefit	2.2		3.0		3.5
Excess tax benefits from stock-based compensation	7.1		(1.8	)	—
Nondeductible expenses	(4.6	)	1.4		(1.7	)
Reserve for uncertain tax positions	3.6		(0.8	)	2.2
Nondeductible goodwill impairment	—		—		(6.8	)
U.S. federal statutory rate change	13.2		—		—
Other	6.0		(1.1	)	1.7
Effective income tax rate	62.5	%	35.7	%	33.9	%

Nondeductible expenses in 2015 include amounts for transaction costs related to the Journal transactions.

The approximate effect of the temporary differences giving rise to deferred income tax assets (liabilities) were as follows:



	As of December 31,
(in thousands)	2017			2016

Temporary differences:
Property and equipment	$	(14,493	)	$	(27,049	)
Goodwill and other intangible assets	(52,532		)	(79,610		)
Investments, primarily gains and losses not yet recognized for tax purposes	2,792			5,180
Accrued expenses not deductible until paid	7,136			8,700
Deferred compensation and retiree benefits not deductible until paid	61,070			96,910
Other temporary differences, net	3,267			3,835
Total temporary differences	7,240			7,966
Federal and state net operating loss carryforwards	15,455			9,597
Valuation allowance for state deferred tax assets	(2,619		)	(955		)
Net deferred tax asset (liability)	$	20,076		$	16,608

Total federal operating loss carryforwards were $24 million and state operating loss carryforwards were $257 million at December 31, 2017. Our state tax loss carryforwards expire through 2037. Because we file separate state income tax returns for certain of our subsidiary companies, we are not able to use state tax losses of a subsidiary company to offset state taxable income of another subsidiary company.

Deferred tax assets totaled $20 million at December 31, 2017. Management believes that it is more likely than not that we will realize the benefits of our federal deferred tax assets and therefore have not recorded a valuation allowance. The deferred tax asset includes the tax effect of state net operating loss carryforwards. We recognize state net operating loss carryforwards as deferred tax assets, subject to valuation allowances. At each balance sheet date, we estimate the amount of carryforwards that are not expected to be used prior to expiration of the carryforward period. The tax effect of the carryforwards that are not expected to be used prior to their expiration is included in the valuation allowance.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act significantly revises the future ongoing U.S. corporate income tax by, among other things, lowering U.S. corporate income tax rates.

The reduction of the U.S. corporate tax rate caused the company to adjust its federal deferred tax assets and liabilities to the lower base rate of 21%. The change in the rate resulted in a provisional estimated benefit of $4.2 million for the year ended December 31, 2017. This amount includes the benefit related to the rate change on the deferred tax liabilities included in the radio net assets that are classified as held for sale (see Note 21) as such benefit is required by GAAP to be included in income taxes from continuing operations.

The changes included in the Tax Act are broad and complex. The final transition impacts of the Tax Act may differ from the above estimate, possibly materially, due to, among other things, changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates the company has utilized to calculate the transition impacts, including impacts from changes to current year taxable earnings estimates. The Securities Exchange Commission has issued rules that would allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts.

During 2015, deferred tax assets relating to employee share-based compensation from the vesting of RSUs and the exercise of stock options had not been recognized since we were in a net tax loss position in that year. The additional tax benefits were reflected as net operating loss carryforwards when we filed our tax returns, but the additional tax benefits were not recorded under GAAP until the tax deduction reduced taxes payable. The amount of unrecognized tax deductions for the years ended December 31, 2015 was approximately $16 million. Effective January 1, 2016, we adopted new accounting guidance that allows us to recognize the benefits when deductible for tax purposes.

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:



	For the years ended December 31,
(in thousands)	2017			2016			2015

Gross unrecognized tax benefits at beginning of year	$	2,665		$	5,011		$	7,024
Increases in tax positions for prior years	16			22			859
Decreases in tax positions for prior years	(390		)	(1,684		)	(96		)
Increases in tax positions for current years	—			336			—
Decreases in tax positions for current years	(54		)	—			—
Decreases from lapse in statute of limitations	(1,149		)	(1,020		)	(2,776		)
Gross unrecognized tax benefits at end of year	$	1,088		$	2,665		$	5,011

The total amount of net unrecognized tax benefits that, if recognized, would affect the effective tax rate was $0.4 million at December 31, 2017. We accrue interest and penalties related to unrecognized tax benefits in our provision for income taxes. At December 31, 2017 and 2016, we had accrued interest related to unrecognized tax benefits of $0.4 million.

We file income tax returns in the U.S. and in various state and local jurisdictions. We are routinely examined by tax authorities in these jurisdictions. At December 31, 2017, we are no longer subject to federal income tax examinations for years prior to 2014. For state and local jurisdictions, we are generally no longer subject to income tax examinations for years prior to 2013.

In 2017, 2016 and 2015 we recognized $1.1 million, $0.9 million and $2.5 million, respectively, of previously unrecognized net tax benefits primarily due to the lapse of the statute of limitations in certain tax jurisdictions.

Due to the potential for resolution of federal and state examinations, and the expiration of various statutes of limitation, it is reasonably possible that our gross unrecognized tax benefits balance may change within the next twelve months by as much as $0.2 million.