(8) INCOME TAXES

The Company is subject to federal and applicable state corporate income taxes on its taxable ordinary income and capital gains. As a corporation taxed under Subchapter C, the Company is able, and intends, to file a consolidated federal income tax return with corporate subsidiaries, in which it holds 80 percent or more of the outstanding equity interest measured by both vote and fair value.

The following table sets forth the significant components of our deferred and other tax assets and liabilities as of September 30, 2018 and December 31, 2017.


(Dollars in thousands)	September 30, 2018			December 31, 2017
Goodwill and other intangibles/unrealized gain on investments in Medallion Bank	($	45,736	)	($	35,297	)
Provision for loan losses/unrealized losses on loans and nonaccrual interest		27,002			10,071
Net operating loss carryforwards⁽¹⁾		17,062			615
Unrealized gains on investments in other controlled subsidiaries		—			(3,617	)
Unrealized gains on investments other than securities		—			(1,395	)
Accrued expenses, compensation, and other		1,815			782
Unrealized gains on investments and other assets		(3,877	)		(542	)

Total deferred tax liability		(3,734	)		(29,383	)
Valuation allowance		(167	)		(39	)

Deferred tax liability, net		(3,901	)		(29,422	)
Taxes receivable		1,890			16,886

Net deferred and other tax liabilities	($	2,011	)	($	12,536	)

(1)	As of September 30, 2018, various subsidiaries of the Company had $11,148 of net operating loss carryforwards that expire at various dates between December 31, 2026 and December 31, 2035, which had a net asset value of $2,057 as of the balance sheet date.

The components of our tax benefit for the three and nine months ended September 30, 2018 and 2017 were as follows.


	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2018			2017			2018			2017
Current
Federal	($	9,353	)	($	910	)	($	3,040	)	$	639
State		(2,318	)		(807	)		(1,078	)		(445	)
Deferred
Federal		9,100			1,609			8,128			7,275
State		2,688			6,263			768			7,675

Net benefit for income taxes	$	117		$	6,155		$	4,778		$	15,144

The following table presents a reconciliation of statutory federal income tax benefit to consolidated actual income tax benefit reported in net income/net increase in net assets for the three and nine months ended September 30, 2018 and 2017.


	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2018			2017			2018			2017
Statutory Federal Income tax benefit at 21% (35% in 2017)	$	877		$	1,937		$	8,106		$	6,374
State and local income taxes, net of federal income tax benefit		(107	)		99			994			327
Appreciation of Medallion Bank		—			1,681			(1,974	)		3,731
Depreciation of other unconsolidated subsidiaries		—			(462	)		—			(462	)
Utilization of carry forwards		(247	)		459			(910	)		2,715
Change in effective state income tax rate		—			3,232			(1,358	)		3,232
Non deductible expenses		(215	)		—			(403	)		—
Other		(191	)		(791	)		323			(773	)

Total income tax benefit	$	117		$	6,155		$	4,778		$	15,144

On December 22, 2017, the US Government signed into law the “Tax Cuts and Jobs Act” which, starting in 2018, reduced the Company’s corporate statutory income tax rate from 35% to 21%, but eliminated or increased certain permanent differences.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible pursuant to ASC 740. The Company considers the reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The Company’s evaluation of the realizability of deferred tax assets must consider both positive and negative evidence. The weight given to the potential effects of positive and negative evidence is based on the extent to which it can be objectively verified. Based upon these considerations, the Company has determined the valuation allowance as of September 30, 2018.

The Company has filed tax returns in many states. Federal, New York State, New York City, and Utah tax filings of the Company for the tax years 2015 through the present are the more significant filings that are open for examination. Currently the Company and the Bank are undergoing various state exams covering the years 2009 to 2011 and 2013 to 2016.