INCOME TAXES

In December 2017, President Trump signed into law new tax legislation known as the Tax Cuts and Jobs Act. In accordance with GAAP, the effects of this new legislation were recognized in 2017 upon enactment. The primary impact of the Act for us relates to the change in the Federal corporate income tax rate from 35% to 21% beginning in 2018. Our previously recorded deferred tax assets and liabilities were remeasured to reflect the 21% rate at which these assets and liabilities will be realized in future periods, with the corresponding impact recorded through our provision for income taxes.

In accordance with SEC Staff Accounting Bulletin No. 118, the amounts recorded in the fourth quarter of 2017 related to the Tax Cuts and Jobs Act represent reasonable estimates based on our analysis to date and are considered to be provisional and subject to revision during 2018. Provisional amounts were recorded for the remeasurement of our 2017 net deferred tax liabilities and ancillary state tax effects. These amounts are considered to be provisional as we continue to assess available tax methods and elections and refine our computations. In addition, further regulatory guidance related to the Tax Cuts and Jobs Act is expected to be issued in 2018 which may result in changes to our current estimates. Any revisions to the estimated impacts of the Tax Cuts and Jobs Act will be recorded quarterly until the computations are complete, which is expected to be no later than the fourth quarter of 2018.

The components of the provision for income taxes as of December 31, 2017, 2016 and 2015, were as follows:



	(in millions)	2017			2016		2015
Current:
	Federal	$	19.3		$	24.4	$	5.5
	State and other	5.6			7.5		7.5
		24.9			31.9		13.0

Deferred:
	Federal	71.4			71.2		79.3
	State and other	6.7			5.6		5.5
	Impact of the Tax Cuts and Jobs Act	(229.5		)	—		—
		(151.4		)	76.8		84.8
Total provision for (benefit from) income taxes		$	(126.5	)	$	108.7	$	97.8

Foreign operations of the Company are insignificant in relation to our overall operating results.

The provision for income taxes as of December 31, 2017, 2016, and 2015 differed from the amounts computed using the federal statutory rate of 35% in effect for each year as follows:



		2017					2016				2015
	(in millions, except percentages)	Dollar Impact			Rate		Dollar Impact		Rate		Dollar Impact		Rate
Income tax at federal statutory rate		$	92.2		35.0	%	$	93.0	35.0	%	$	83.6	35.0	%
State tax, net of federal effect		8.6			3.3	%	10.5		3.9	%	10.3		4.3	%
Nondeductible meals and entertainment		3.4			1.3	%	3.4		1.3	%	3.6		1.5	%
Impact of the Tax Cuts and Jobs Act		(229.5		)	(87.1	)%	—		—		—		—
Other, net		(1.2		)	(0.5	)%	1.8		0.7	%	0.3		0.2	%
	Total provision for (benefit from) income taxes	$	(126.5	)	(48.0	)%	$	108.7	40.9	%	$	97.8	41.0	%

The components of the net deferred tax liability included in deferred income taxes in the consolidated balance sheets as of December 31, 2017 and 2016, were as follows:



(in millions)		2017			2016
Deferred tax assets:
Allowances for doubtful accounts		$	1.1		$	1.0
Compensation and employee benefits		15.6			21.5
Insurance and claims accruals		2.8			4.7
State net operating losses and credit carryforwards		17.7			14.0
Other		4.0			6.2
	Total gross deferred tax assets	41.2			47.4
Valuation allowance		(4.4		)	(2.8		)
	Total deferred tax assets, net of valuation allowance	36.8			44.6
Deferred tax liabilities:
Property and equipment		410.8			572.9
Prepaid expenses		3.6			5.1
Intangibles		8.7			5.2
Other		0.3			—
	Total gross deferred tax liabilities	423.4			583.2
Net deferred tax liability		$	386.6		$	538.6

Unrecognized Tax Benefits-Our unrecognized tax benefits as of December 31, 2017 would reduce the provision for income taxes if subsequently recognized. Potential interest and penalties related to unrecognized tax benefits are recorded in income tax expense. Interest and penalties recorded in income tax expense for the years ended December 31, 2017, 2016, and 2015 were immaterial. Accrued interest and penalties for such unrecognized tax benefits as of December 31, 2017, 2016 and 2015 were $1.2 million, $1.0 million, and $0.9 million, respectively. We expect no significant increases or decreases for unrecognized tax benefits during the twelve months immediately following the December 31, 2017 reporting date.

As of December 31, 2017, 2016, and 2015, a reconciliation of the beginning and ending amount of unrecognized tax benefits, which is recorded as other noncurrent liabilities in the consolidated balance sheets, is as follows:



(in millions)		2017		2016			2015
Gross unrecognized tax benefits - beginning of year		$	2.4	$	2.0		$	2.9
	Gross increases - tax positions related to current year	0.4		0.5			0.5
	Gross decreases - tax positions taken in prior years	—		(0.1		)	(1.1		)
	Settlements	—		—			(0.2		)
	Lapse of statutes	—		—			(0.1		)
Gross unrecognized tax benefits - end of year		$	2.8	$	2.4		$	2.0

Tax Examinations-We file a U.S. federal income tax return, as well as income tax returns in a majority of state tax jurisdictions. We also file returns in foreign jurisdictions. The years 2014, 2015 and 2016 are open for examination by the Internal Revenue Service (“IRS”), and various years are open for examination by state and foreign tax authorities. In June 2016, we closed the examination with the IRS for tax years 2012 and 2013, and there were no adjustments that had a material impact on income tax expense. State and foreign jurisdictional statutes of limitations generally range from three to four years.

Carryforwards-As of December 31, 2017, we had $289.1 million of state net operating loss carryforwards which are subject to expiration from 2018 to 2037. We also had state credit carryforwards of $0.8 million, which are subject to expiration from 2018 to 2027, and no capital loss carryforwards. The deferred tax assets related to carryforwards at December 31, 2017 were $17.2 million for state net operating loss carryforwards and $0.5 million for state credit carryforwards. Carryforwards are reviewed for recoverability based on historical taxable income, the expected reversals of existing temporary differences, tax-planning strategies, and projections of future taxable income. At December 31, 2017, we carried a total valuation allowance of $4.4 million, which represents $4.1 million against state deferred tax assets and $0.3 million against state credit carryforwards.