INCOME TAXES

Income tax expense (benefit) consists of the following:



	Three Months Ended September 30,					Nine Months Ended September 30,
	2018			2017		2018			2017
Current:
Federal	$	5,691		$	4,072	$	6,299		$	6,683
State and Local	(263		)	131		424			354
Total Current Income Tax Expense (Benefit)	5,428			4,203		6,723			7,037
Deferred:
Federal	(1,201		)	20,977		(12,829		)	97,053
State and Local	(664		)	7,433		149			16,963
Total Deferred Income Tax Expense (Benefit)	(1,865		)	28,410		(12,680		)	114,016
Total Income Tax Expense (Benefit)	$	3,563		$	32,613	$	(5,957	)	$	121,053

New Residential intends to qualify as a REIT for each of its tax years through December 31, 2018. A REIT is generally not subject to U.S. federal corporate income tax on that portion of its income that is distributed to stockholders if it distributes at least 90% of its REIT taxable income to its stockholders by prescribed dates and complies with various other requirements.

New Residential operates various securitization vehicles and has made certain investments, particularly its investments in MSRs (Note 5), Servicer Advance Investments (Note 6) and REO (Note 8), through taxable REIT subsidiaries (“TRSs”) that are subject to regular corporate income taxes which have been provided for in the provision for income taxes, as applicable.

New Residential has recorded a net deferred tax liability of approximately $3.9 million as of September 30, 2018, primarily related to unrealized gains and discount accruals offset by net operating loss carry forwards.

On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) was signed into law. The TCJA includes a number of significant changes to existing U.S. corporate income tax laws, most notably a reduction of the U.S. corporate income tax rate from 35 percent to 21 percent, effective January 1, 2018. New Residential measures deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid. New Residential is still analyzing certain aspects of the TCJA and refining its calculations, which could potentially affect the measurement of these balances or give rise to new deferred tax amounts.