INCOME TAXES

On December 22, 2017, the President signed the Tax Cuts and Jobs Act (the "Tax Act"). The Tax Act, among other things, (i) lowered the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018; (ii) provided for 100% expense deduction of certain qualified depreciable assets, which includes the Company's lease merchandise inventory, purchased after September 27, 2017 (but would be phased down starting in 2023); and (iii) the manufacturing deduction that expired in 2017 under the previous tax legislation was not extended. Consequently, the Company remeasured its net deferred tax liabilities as of December 31, 2017 using the lower U.S. corporate income tax rate, which resulted in a provisional estimated $140 million non-cash income tax benefit. The Company will lose its 2017 manufacturing deduction, which is limited to 9% of taxable income, as the Company is estimating it will be in a net operating loss position for tax purposes in 2017 as a result of the Tax Act's 100% expense deduction on qualified depreciable assets discussed above.

We performed a provisional analysis of the income tax effects of the Tax Act and recorded a reasonable estimate of such effects. The estimated tax benefit we recorded for the year ended December 31, 2017 related to the Tax Act may differ, possibly materially, due to, among other things, further refinement of our federal and state calculations, changes in interpretations and assumptions that we have made, and additional guidance that may be issued by the U.S. Government. We will complete our analysis over a one-year measurement period ending December 22, 2018, and any adjustments during this measurement period will be included in net earnings as an adjustment to income tax expense (benefit) in the reporting period when such adjustments are determined.

As result of the 100% bonus depreciation provisions in the Tax Act not being enacted until December 22, 2017, the Company made more than the required estimated federal tax liability payments in 2017; and therefore, has a $100.0 million income tax receivable as of December 31, 2017. In addition, as a result of the extended bonus depreciation provisions in the Protecting Americans From Tax Hikes Act of 2015 not being enacted until December 2015, the Company paid more than the amount ultimately required for the 2015 federal tax liability. Due to that overpayment the Company received a refund of $120.0 million in February 2016.

Following is a summary of the Company’s income tax (benefit) expense:



	Year Ended December 31,
(In Thousands)	2017			2016			2015
Current Income Tax Expense:
Federal	$	(3,530	)	$	103,993		$	32,999
State	9,772			10,308			5,442
	6,242			114,301			38,441
Deferred Income Tax (Benefit) Expense:
Federal	(60,547		)	(33,470		)	35,413
State	1,346			(1,692		)	3,557
	(59,201		)	(35,162		)	38,970
Income Tax (Benefit) Expense	$	(52,959	)	$	79,139		$	77,411

Significant components of the Company’s deferred income tax liabilities and assets are as follows:



	December 31,
(In Thousands)	2017		2016
Deferred Tax Liabilities:
Lease Merchandise and Property, Plant and Equipment	$	122,155	$	185,891
Goodwill and Other Intangibles	37,080		52,135
Investment in Partnership	107,173		96,291
Other, Net	2,074		1,619
Total Deferred Tax Liabilities	268,482		335,936
Deferred Tax Assets:
Accrued Liabilities	25,509		33,243
Advance Payments	8,199		13,087
Other, Net	23,771		20,277
Total Deferred Tax Assets	57,479		66,607
Less Valuation Allowance	—		(875		)
Net Deferred Tax Liabilities	$	211,003	$	270,204

The Company’s effective tax rate differs from the statutory United States Federal income tax rate as follows:



	Year Ended December 31,
	2017		2016		2015
Statutory Rate	35.0	%	35.0	%	35.0	%
Increases (Decreases) in United States Federal Taxes
Resulting From:
State Income Taxes, net of Federal Income Tax Benefit	2.7		2.6		2.7
Federal Tax Credits	(0.8	)	(1.1	)	(0.5	)
Change in Valuation Allowance	(0.4	)	—		—
Tax Act Enactment - Remeasurement of net Deferred Tax Liabilities	(58.2	)	—		—
Other, net	(0.4	)	(0.3	)	(0.9	)
Effective Tax Rate	(22.1	)%	36.2	%	36.3	%

The Company files a federal consolidated income tax return in the United States and the separate legal entities file in various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to federal, state and local tax examinations by tax authorities for years before 2014.

The following table summarizes the activity related to the Company’s uncertain tax positions:



	Year Ended December 31,
(In Thousands)	2017			2016			2015
Balance at January 1,	$	2,594		$	3,561		$	2,644
Additions Based on Tax Positions Related to the Current Year	456			258			331
Additions for Tax Positions of Prior Years	232			293			1,176
Prior Year Reductions	(236		)	(776		)	(1		)
Statute Expirations	(346		)	(609		)	(589		)
Settlements	(431		)	(133		)	—
Balance at December 31,	$	2,269		$	2,594		$	3,561

As of December 31, 2017 and 2016, the amount of uncertain tax benefits that, if recognized, would affect the effective tax rate is $1.7 million and $2.5 million, respectively, including interest and penalties.

During the year ended December 31, 2017 and 2016, the Company recognized a net benefit of $0.6 million and $0.1 million, respectively, related to interest and penalties. During the year ended December 31, 2015, the Company recognized interest and penalties of $0.4 million. The Company had $0.3 million and $0.9 million of accrued interest and penalties at December 31, 2017 and 2016, respectively. The Company recognizes potential interest and penalties related to uncertain tax benefits as a component of income tax (benefit) expense.