4. Income Taxes

The income tax provision for fiscal 2017, fiscal 2016 and fiscal 2015 is summarized as follows:


	For the Fiscal Years Ended
	Nov. 30,		Nov. 30,		Nov. 30,
	2017		2016		2015
Current federal	$	(43)	$	50	$	(83)
Current state and local		(7)		—		—
Deferred federal		(2,610)		(580)		(217)
Deferred state and local		(13)		(205)		(80)
Total income tax provision	$	(2,673)	$	(735)	$	(380)

The income tax provision for fiscal 2016 included a charge of $180 for the effect of a change in Connecticut tax law, effective for Griffin in fiscal 2016, whereby, the usage of state net operating loss carryforwards in future years will be limited to 50% of taxable income. Therefore, in fiscal 2016, Griffin decreased its expected realization of the tax benefit related to its Connecticut state net operating loss carryforwards. The decrease of the realization rate is based on management's current projections of taxable income in Connecticut in future years that would generate income taxes in excess of capital based taxes.

In fiscal 2015, Griffin decreased its expected realization of the tax benefit related to its Connecticut state net operating loss carryforwards and other Connecticut state temporary differences. This decrease was based on management's projection in that year of taxable income attributable to the state of Connecticut in future years that would generate income taxes in excess of capital based taxes. A charge of $87 is included in the fiscal 2015 tax provision for state taxes to reflect the expected lower realization of certain state tax benefits.

Griffin did not recognize a current tax benefit in fiscal 2017, fiscal 2016 or fiscal 2015 from the exercise of employee stock options. In fiscal 2017 and fiscal 2015, Griffin utilized net operating loss carryforwards to offset taxable income. A benefit was not recorded in fiscal 2016 because Griffin did not have taxable income. As of November 30, 2017, Griffin had an unrecognized tax benefit of approximately $900 for the effect of employee stock options exercised in fiscal years 2006 through 2015. In the first quarter of fiscal 2018, Griffin plans to adopt ASC 2016-09 (see Note 1), which requires recognition on the consolidated balance sheet of the tax benefit of options exercised regardless if there is taxable income or loss. Griffin expects to record a deferred tax asset of approximately $900 upon adoption, with a corresponding increase to retained earnings. In fiscal 2017, fiscal 2016 and fiscal 2015, the deferred tax asset related to non‑qualified stock options was reduced by $17, $17 and $9, respectively, as a result of exercises and forfeitures of those options.

The income tax provisions in fiscal 2017 and fiscal 2015 are net of the effect of recording benefits related to valuation allowances on certain state deferred tax assets (principally Connecticut) of $238 and $76, respectively, less federal income tax expense of $87 and $26, respectively. The income tax provision in fiscal 2016 is net of the effect of recording a charge related to valuation allowances on certain state deferred tax assets (principally Connecticut) of $1,798, less a federal income tax benefit of $629. The establishment of the valuation allowances reflects management’s determination that it is more likely than not that Griffin will not generate sufficient taxable income in the future to fully utilize certain state net operating loss carryforwards.

Other comprehensive loss includes deferred tax (expense) benefit as follows:


	For the Fiscal Years Ended
	Nov. 30,		Nov. 30,		Nov. 30,
	2017		2016		2015
Fair value adjustment of Griffin's cash flow hedges	$	(463)	$	(399)	$	164
Mark to market adjustment on Centaur Media plc		23		347		(16)
Total income tax (expense) benefit included in other comprehensive income (loss)	$	(440)	$	(52)	$	148

The differences between the income tax provision at the United States statutory income tax rate and the actual income tax provision for fiscal 2017, fiscal 2016 and fiscal 2015 are as follows:


	For the Fiscal Years Ended
	Nov. 30,		Nov. 30,		Nov. 30,
	2017		2016		2015
Tax provision at statutory rate	$	(2,555)	$	(459)	$	(282)
State and local taxes, including valuation allowance, net of federal tax effect		(18)		(205)		(80)
Permanent items		(41)		(35)		(23)
Other		(59)		(36)		5
Total income tax provision	$	(2,673)	$	(735)	$	(380)

The state and local income tax expense, net of federal tax effect, principally reflects a decrease in the realization of the tax benefit related to Connecticut state net operating loss carryforwards and expected Connecticut state other temporary differences for fiscal 2016 and fiscal 2015.

The significant components of Griffin’s deferred tax assets and deferred tax liabilities are as follows:


	Nov. 30,		Nov. 30,
	2017		2016
Deferred tax assets:
Deferred revenue	$	3,841	$	3,068
Federal net operating loss carryforwards		3,797		4,037
Retirement benefit plans		1,936		1,675
State net operating loss carryforwards		1,366		1,537
Non-qualified stock options		970		892
Cash flow hedges		159		623
Investment in Centaur Media plc		—		309
Other		226		285
Total deferred tax assets		12,295		12,426
Valuation allowances		(1,363)		(1,514)
Net deferred tax assets		10,932		10,912
Deferred tax liabilities:
Real estate assets		(7,199)		(4,244)
Deferred rent		(1,291)		(1,095)
Other		(538)		(589)
Total deferred tax liabilities		(9,028)		(5,928)
Net total deferred tax assets	$	1,904	$	4,984

At November 30, 2017, Griffin had federal net operating loss carryforwards of approximately $10,850 with expirations ranging from sixteen to nineteen years and state net operating loss carryforwards of approximately $100 with expirations ranging from fourteen to nineteen years. Management has determined that a valuation allowance is required for net operating loss carryforwards in Connecticut related to Griffin and Imperial and for certain other states related to Imperial. Griffin has evaluated the likelihood that it will realize the benefits of its deferred tax assets. Based on a significant number of appreciated assets, primarily real estate, held by Griffin and the significant length of time expected before Griffin’s deferred tax assets would expire, Griffin believes that it is more likely than not that it will utilize the benefit of its remaining deferred tax assets.

Griffin evaluates each tax position taken in its tax returns and recognizes a liability for any tax position deemed less likely than not to be sustained under examination by the relevant taxing authorities. Griffin believes that its income tax filing positions will be sustained on examination and does not anticipate any adjustments that would result in a material change on its financial statements. As a result, no accrual for uncertain income tax positions has been recorded pursuant to ASC 740‑10.

Federal income tax returns for fiscal 2012 through fiscal 2016 are open to examination by the Internal Revenue Service (“IRS”). An IRS examination of the fiscal 2015 federal tax return was opened subsequent to November 30, 2017. The remaining periods subject to examination for Griffin’s significant state return, which is Connecticut, are fiscal 2008 through fiscal 2016.

On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was enacted and became effective for Griffin on January 1, 2018 (see Note 12). The TCJA reduces the U.S. federal corporate statutory income tax rate from 35% to 21%, which Griffin expects will result in a blended fiscal 2018 federal statutory rate for Griffin of approximately 22.2%. The impact of the lower statutory rate applied to Griffin’s deferred tax assets and deferred tax liabilities is expected to be included in Griffin’s income tax provision/benefit in the fiscal 2018 first quarter. Griffin expects to record income tax expense between approximately $1,000 and $1,100, due to the re-measurement of its net deferred tax assets on its consolidated balance sheet in the fiscal 2018 first quarter.