INCOME TAXES

The income tax benefit consists of the following for the years ended December 31, 2019, 2018 and 2017 (in thousands):



	2019			2018			2017
US federal income tax (benefit) expense:
Current	$	—		$	—		$	—
Deferred	(3,072		)	(2,688		)	(21,944		)
	(3,072		)	(2,688		)	(21,944		)
State income tax (benefit) expense:
Current	2,074			1,176			1,244
Deferred	(1,276		)	(1,141		)	2,115
	798			35			3,359
Total income tax benefit	$	(2,274	)	$	(2,653	)	$	(18,585	)

The difference between the statutory federal income tax rate and the effective tax rate is as follows for the years ended December 31, 2019, 2018 and 2017:



	2019		2018		2017
US federal statutory tax rate	21.0	%	21.0	%	35.0	%
US federal statutory tax rate change	—		—		115.9
State income taxes - net of federal benefit	(0.5	)	2.4		(10.1	)
Valuation allowance	(13.4	)	—		—
Changes in uncertain tax positions	—		14.7		(8.8	)
Non-deductible expenses	(3.5	)	(7.5	)	(5.6	)
Other, net	(0.7	)	(0.3	)	—
Effective income tax rate	2.9	%	30.3	%	126.4	%

The components of deferred income tax assets and liabilities using the 21% U.S. Federal statutory tax rate were as follows as of December 31, 2019 and 2018 (in thousands):



	2019			2018
Deferred tax assets:
Price concessions	$	12,302		$	14,879
Compensation and benefits	3,672			1,925
Interest limitation carryforward	38,623			3,486
Operating lease liability	19,462			1,640
Net operating losses	147,749			10,155
Other	5,506			3,644
Deferred tax assets before valuation allowance	227,314			35,729
Valuation allowance	(109,531		)	(1,373		)
Deferred tax assets net of valuation allowance	117,783			34,356

Deferred tax liabilities:
Accelerated depreciation	(10,376		)	(9,483		)
Operating lease right-of-use asset	(15,442		)	—
Intangible assets	(71,204		)	(39,977		)
Goodwill	(20,250		)	(14,700		)
Other	(2,654		)	(3,677		)
Deferred tax liabilities	(119,926		)	(67,837		)
Net deferred tax liabilities	$	(2,143	)	$	(33,481	)

As a result of the Merger, the Company recorded a full valuation allowance against all of its net U.S. federal and state deferred tax assets with the exception of $0.8 million of estimated state net operating losses (“NOL”). The initial recognition of this valuation allowance by the Company was reflected in the opening balance sheet of BioScrip and, to that extent, did not impact the Company’s tax expense (benefit) for the year ended December 31, 2019. The valuation allowance for deferred tax assets as of December 31, 2019 was $109.5 million.

In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible. The Company considers the scheduled reversal of deferred tax liabilities (including the effect in available carryback and carryforward periods), projected taxable income, and tax-planning strategies in making this assessment. On a quarterly basis, the Company evaluates the positive and negative evidence in determining if the valuation allowance is fairly stated.

The Company is subject to taxation in the United States and various states. As a result of the Merger, BioScrip carried over $461.5 million of federal net operating losses, $491.9 million of state net operating losses, and $85.0 million of interest limitation carryforwards. At December 31, 2019, the Company had $541.0 million of gross federal NOL carryforwards of which $401.2 million are available to offset future taxable income in the United States. These NOL’s will begin to expire in 2026 if not utilized. The remaining gross federal NOL’s of $139.8 million at December 31, 2019 are expected to expire unutilized due to limitations under Internal Revenue Code Section 382. At December 31, 2018, the Company had $38.1 million of gross federal NOL’s. At December 31, 2019 and 2018, the Company had $156.6 million and $13.6 million of interest limitation carryforwards. At December 31, 2019 and 2018, the Company also had $601.9 million and $43.5 million of cumulative gross state NOL carryforwards available to offset future taxable income in various states.

At December 31, 2019 and 2018, the unrecognized tax benefits for uncertain tax positions was $0.

The following table presents the valuation allowance for deferred tax assets for the years ended December 31, 2019, 2018 and 2017 (in thousands):



			Additions
Description	Balance at Beginning of Period		Charged (Benefit) to Costs and Expenses		Charged to Other Accounts		Balance at End Period

2017: Valuation allowance for deferred tax assets	$	765	$	498	$	—	$	1,263

2018: Valuation allowance for deferred tax assets	$	1,263	$	110	$	—	$	1,373

2019: Valuation allowance for deferred tax assets	$	1,373	$	15,395	$	92,763	$	109,531

Currently, the Company is not subject to any U.S. Federal income tax audits. The Company is subject to various state tax audits, and believes that the outcome of these audits will not have a material impact on the Company.