v3.8.0.1

Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Taxes |
Income Taxes | Note 11 - Income Taxes Income taxes have been provided using the liability method under ASC 740. The liability method is used in accounting for income taxes where deferred income tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences reverse. The components of income tax expense (benefit) for the years ended December 31, 2017, 2016 and 2015 are as follows (in thousands):
|  | For the Years Ended December 31, |
|  | 2017 |  | 2016 |  | 2015 |
Current: |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 80 |  | $ | 542 |  | $ | 253 |
State |  |  | 296 |  |  | 364 |  |  | 183 |
Total current |  |  | 376 |  |  | 906 |  |  | 436 |
Deferred: |  |  |  |  |  |  |  |  |  |
Federal |  |  | 38,303 |  |  | (93,383) |  |  | — |
State |  |  | 1,589 |  |  | (17,044) |  |  | — |
Total deferred |  |  | 39,892 |  |  | (110,427) |  |  | — |
Total income tax expense (benefit) |  | $ | 40,268 |  | $ | (109,521) |  | $ | 436 |
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred income tax assets and liabilities as of December 31, 2017 and 2016 are as follows (in thousands):
|  | December 31, |
|  | 2017 |  | 2016 |
Deferred tax assets: |  |  |  |  |  |  |
Net operating loss carryforward and credits |  | $ | 32,829 |  | $ | 47,529 |
Impairment charges |  |  | 28,926 |  |  | 48,311 |
Other inventory valuation adjustments |  |  | 7,929 |  |  | 13,819 |
Other reserves and accruals |  |  | 3,366 |  |  | 5,028 |
Land development reserves |  |  | 3,180 |  |  | 5,270 |
Executive incentive compensation |  |  | 1,875 |  |  | 2,352 |
Total deferred tax assets |  |  | 78,105 |  |  | 122,309 |
Valuation allowance for deferred tax assets |  |  | — |  |  | — |
Deferred tax assets, net of valuation allowance |  |  | 78,105 |  |  | 122,309 |
Deferred tax liabilities: |  |  |  |  |  |  |
Deferred gain |  |  | (3,495) |  |  | (6,246) |
Goodwill |  |  | (1,524) |  |  | (1,013) |
State taxes |  |  | (1,426) |  |  | (2,800) |
Depreciation |  |  | (844) |  |  | (1,222) |
Capitalized expenses |  |  | (451) |  |  | (771) |
Total deferred tax liabilities |  |  | (7,740) |  |  | (12,052) |
Deferred tax assets, net |  | $ | 70,365 |  | $ | 110,257 |
As of December 31, 2017, our gross federal and state NOL carryforwards were $98.7 million and $259.0 million, respectively. Federal NOL carryforwards may be used to offset future taxable income for 20 years and begin to expire in 2032. State NOL carryforwards may be used to offset future taxable income for 20 years and begin to expire in 2028. We evaluate our deferred tax assets each period to determine if a valuation allowance is required based on whether it is “more likely than not” that some portion of the deferred tax assets would not be realized. The ultimate realization of these deferred tax assets is dependent upon the generation of sufficient taxable income during future periods. We conduct our evaluation by considering all available positive and negative evidence. This evaluation considers, among other factors, historical operating results, forecasts of future profitability, the duration of statutory carryforward periods, and the outlooks for the U.S. housing industry and broader economy. Based on our evaluation through June 30, 2016, we determined that the valuation allowance against all of our federal and state deferred tax assets was no longer required. Accordingly, by December 31, 2016 we reversed the entire valuation allowance. Any interest or penalties assessed have been minimal and immaterial to our financial results. In the event we are assessed any interest or penalties in the future, we plan to include them in our consolidated statements of operations as income tax expense. A reconciliation of income tax expense (benefit) to the expected income tax expense (benefit) at the federal statutory rate of 35% for each of the years ended December 31, 2017, 2016 and 2015 is as follows (in thousands):
|  | For the Years Ended December 31, |
|  | 2017 |  | 2016 |  | 2015 |
Income tax expense computed at statutory rate |  | $ | 6,416 |  | $ | 13,155 |  | $ | 4,320 |
State income tax expense, net of federal benefit |  |  | 506 |  |  | 1,201 |  |  | 1,452 |
Remeasurement of deferred tax assets (lower federal rate) |  |  | 32,484 |  |  | — |  |  | — |
Change in valuation allowance on deferred tax assets |  |  | — |  |  | (124,525) |  |  | (5,336) |
Change in state rate |  |  | 395 |  |  | 688 |  |  | — |
Share-based compensation costs |  |  | 470 |  |  | — |  |  | — |
Other |  |  | (3) |  |  | (40) |  |  | — |
Income tax expense (benefit) |  | $ | 40,268 |  | $ | (109,521) |  | $ | 436 |
On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was signed into law, which, among other items, reduces the federal statutory corporate tax rate from 35% to 21%, effective January 1, 2018. As required under ASC 740, we evaluated and accounted for the impact of the changes from the TCJA in the period when the law was enacted. As a result, we recorded a $32.5 million one-time revaluation adjustment to decrease our net deferred tax assets in the quarter ended December 31, 2017. This adjustment was primarily due to the reduction in the federal corporate statutory tax rate. This amount has been recorded as a one-time increase to the provision for income taxes. Our assessment of the TCJA was based on information available at this time and results for the quarter ended December 31, 2017. Future periods may differ from the impact disclosed herein due to, among other things, changes in interpretations and assumptions made by us, guidance that may be issued and actions we may take as a result of the TCJA. The overall impact of the TCJA is also subject to the effect of other provisions of the TCJA. We file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. We are subject to U.S. federal income tax examination for calendar tax years ending 2014 through 2016. Additionally, we are subject to various state income tax examinations for the 2013 through 2016 calendar tax years.

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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 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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