4. Income Taxes

The income tax provision for fiscal 2018, fiscal 2017 and fiscal 2016 is summarized as follows:


	For the Fiscal Years Ended
	Nov. 30,		Nov. 30,		Nov. 30,
	2018		2017		2016
Current federal	$	25	$	(43)	$	50
Current state and local		(102)		(7)		—
Deferred federal		(678)		(2,610)		(580)
Deferred state and local		250		(13)		(205)
Total income tax provision	$	(505)	$	(2,673)	$	(735)

On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was enacted and became effective for Griffin on January 1, 2018. The TCJA reduced the U.S. federal corporate statutory income tax rate from 35% to 21%, which results in a blended fiscal 2018 federal corporate statutory rate for Griffin of approximately 22%. The impact of the lower statutory rate resulted in a net charge of $1,001 for the re-measurement of Griffin’s deferred tax assets and deferred tax liabilities that is included in Griffin’s fiscal 2018 income tax provision.

In the fiscal 2018 first quarter, prior to the effective date of the U.S. federal corporate statutory income tax rate reduction, Griffin recorded a deferred tax asset of $879 related to the cumulative effect of stock option exercises upon adoption of ASU No. 2016-09 (see Note 1). Griffin had not previously recognized a current tax benefit in fiscal 2017 or fiscal 2016 from the exercise of employee stock options. In fiscal 2017, Griffin utilized net operating loss carryforwards to offset taxable income and in fiscal 2016, a benefit was not recorded because Griffin did not have taxable income. In each of fiscal 2017 and fiscal 2016, the deferred tax asset related to non‑qualified stock options was reduced by $17, respectively, as a result of exercises and forfeitures of those options.

The income tax provisions in fiscal 2018 and fiscal 2016 are net of the effect of recording charges related to valuation allowances on certain state deferred tax assets (principally Connecticut) of $681 and $1,798, respectively, less federal income tax benefits of $146 and $629, respectively. The income tax provision in fiscal 2017 is net of the effect of recording a benefit related to valuation allowances on certain state deferred tax assets (principally Connecticut) of $238 less federal income tax expense of $87. 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.

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 was based on management's projections of taxable income in Connecticut in future years that would generate income taxes in excess of capital based taxes.

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


	For the Fiscal Years Ended
	Nov. 30,		Nov. 30,		Nov. 30,
	2018		2017		2016
Fair value adjustment of Griffin's cash flow hedges	$	(797)	$	(463)	$	(399)
Mark to market adjustment on Centaur Media plc		—		23		347
Total income tax expense included in other comprehensive income (loss)	$	(797)	$	(440)	$	(52)

The differences between the income tax provision at the U.S. statutory income tax rate and the actual income tax provision for fiscal 2018, fiscal 2017 and fiscal 2016 are as follows:


	For the Fiscal Years Ended
	Nov. 30,		Nov. 30,		Nov. 30,
	2018		2017		2016
Tax benefit (provision) at statutory rate	$	255	$	(2,555)	$	(459)
State and local taxes, including valuation allowance, net of federal tax effect		78		(18)		(205)
Permanent items		(24)		(41)		(35)
Federal rate change under TCJA		(1,001)		—		—
Other		187		(59)		(36)
Total income tax provision	$	(505)	$	(2,673)	$	(735)

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.

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


	Nov. 30,		Nov. 30,
	2018		2017
Deferred tax assets:
Federal net operating loss carryforwards	$	3,657	$	3,797
Deferred revenue		2,402		3,841
State net operating loss carryforwards		2,236		1,366
Retirement benefit plans		1,416		1,936
Non-qualified stock options		480		970
Cash flow hedges		—		159
Other		220		226
Total deferred tax assets		10,411		12,295
Valuation allowances		(2,190)		(1,363)
Net deferred tax assets		8,221		10,932
Deferred tax liabilities:
Real estate assets		(4,331)		(7,199)
Deferred rent		(1,018)		(1,291)
Cash flow hedges		(674)		—
Other		(642)		(538)
Total deferred tax liabilities		(6,665)		(9,028)
Net total deferred tax assets	$	1,556	$	1,904

At November 30, 2018, Griffin had federal net operating loss carryforwards of approximately $15,862 with expirations ranging from fourteen to twenty years and state net operating loss carryforwards (net of valuation allowances) of approximately $650 with expirations ranging from eleven to twenty years. Management has determined that a valuation allowance is required for net operating loss carryforwards in Connecticut related to Griffin and Imperial Nurseries, Inc. (“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 amount 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 2016 and fiscal 2017 are open to examination by the Internal Revenue Service (“IRS”). An IRS examination of the fiscal 2015 federal tax return was completed in fiscal 2018 and was accepted as filed.