10.INCOME TAXES

Income taxes for the years ended December 31, 2017, 2016 and 2015 consisted of the following:


	Years Ended December 31,
(In millions)	2017		2016		2015
Current:
Federal	$	21.6	$	10.5	$	22.6
State		2.2		(1.3)		2.9
Total		23.8		9.2		25.5
Deferred:
Deferred tax expense		24.4		39.9		49.3
Remeasurement and discrete adjustments related to the Tax Act (1)		(155.0)		—		—
Total		(130.6)		39.9		49.3
Total income taxes	$	(106.8)	$	49.1	$	74.8

(1)

Deferred income taxes for the year ended December 31, 2017 includes a non-cash income tax benefit of $155.0 million related to the remeasurement of the Company’s deferred assets and liabilities and other discrete adjustments as a result of applying the Tax Act during the year ended December 31, 2017.

Income taxes for the years ended December 31, 2017, 2016, and 2015, differs from amounts computed by applying the statutory federal rate to income before income taxes for the following reasons:


	Years Ended December 31,
	2017		2016		2015
Computed federal income tax expense	35.0	%	35.0	%	35.0	%
State income tax	2.6	%	1.8	%	2.5	%
Valuation allowance	1.4	%	0.3	%	1.1	%
Foreign taxes	0.1	%	0.4	%	0.6	%
Remeasurement and discrete adjustments related to the Tax Act (1)	(123.8)	%	—	%	—	%
Share-based payments	(1.4)	%	—	%	—	%
Other — net	0.8	%	0.1	%	2.9	%
Effective income tax rate	(85.3)	%	37.6	%	42.1	%

(1)

Effective income tax rate for the year ended December 31, 2017 includes the impact of a non-cash income tax benefit of $155.0 million related to the remeasurement of the Company’s deferred assets and liabilities and other discrete adjustments as a result of applying the Tax Act during the year ended December 31, 2017.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2017 and 2016, were as follows:


	As of December 31,
(In millions)	2017		2016
Deferred tax assets:
Benefit plans	$	42.6	$	63.1
Federal net operating losses		21.6		52.1
Insurance reserves		6.8		9.9
State net operating losses		7.4		7.9
Foreign losses		6.6		4.9
Alternative minimum tax credits		4.2		31.0
Allowance for doubtful accounts		0.9		1.3
Reserves		—		2.4
Other		1.9		3.5
Total deferred tax assets		92.0		176.1
Valuation allowance		(13.0)		(11.9)
Total Deferred tax assets, net of valuation allowance		79.0		164.2

Deferred tax liabilities:
Basis differences for property and equipment		254.4		339.0
Capital Construction Fund		54.2		115.8
Intangibles		36.4		53.8
Deferred revenue		6.9		9.5
Joint ventures and other investments		9.6		9.9
Reserves		2.7		—
Total deferred tax liabilities		364.2		528.0
Deferred tax liability, net	$	285.2	$	363.8

The Company’s income taxes payable has been reduced by the tax benefits from share-based compensation. The Company receives an income tax benefit for exercised stock options calculated as the difference between the fair market value of the stock issued at the time of exercise and the option exercise price, tax-effected. The Company also receives an income tax benefit for non-vested stock when it vests, measured at the fair market value of the stock at the time of vesting, tax-effected. The net tax benefits from share-based transactions were $2.2 million and $2.6 million for 2016 and 2015, respectively, and the portion of the tax benefit related to the excess of the amount reported as the tax deduction over expense was reflected as an increase to additional paid-in-capital in the 2016 Consolidated Statements of Shareholders’ Equity.

Valuation Allowance: The Company recorded a valuation allowance against operating losses related to a foreign subsidiary of $1.7 million, $0.4 million and $1.8 million in 2017, 2016 and 2015, respectively, as the Company determined the tax benefits associated with such losses may not be realized in future periods. Valuation allowances recorded against all of the Company’s foreign income tax NOLs and a portion of the state income tax NOLs were $13.0 million and $11.9 million as of December 31, 2017 and 2016, respectively. The Company believes that it is more likely than not that the benefit from these amounts will not be realized.

Net Operating Losses and Tax Credit Carryforwards: The Company’s net operating losses (“NOLs”) and tax credit carryforwards at December 31, 2017 and 2016, were as follows:


(In millions)	Expiration Date	2017		2016
U.S. Federal income tax NOLs	Various dates beginning in 2027	$	183.8	$	190.0
U.S. State income tax NOLs	Various dates beginning in 2032	$	192.3	$	192.8
Foreign income tax NOLs	No expiration date	$	23.7	$	17.6
U.S. alternative minimum tax credit (1)	No expiration date	$	4.2	$	31.0

(1)

2017 amounts exclude $50.2 million of federal alternative minimum tax credits which are refundable commencing 2018 in accordance with the Tax Act, and is included in the Company’s other long-term assets in the Consolidated Balance Sheets (see Note 2).

The U.S. federal and state income tax NOLs in the Company’s filed income tax returns include unrecognized tax benefits. The deferred tax assets recognized for those NOLs are presented net of these unrecognized tax benefits. Because of the change of ownership provisions of the Tax Reform Act of 1986, use of a portion of the Company’s domestic NOL and tax credit carryforwards may be limited in future periods. Further, a portion of the federal and state income tax NOLs and tax credit carryforwards may expire before being applied to reduce future income tax liabilities.

Unrecognized Tax Benefits: Total unrecognized benefits represent the amount that, if recognized, would favorably affect the Company’s effective tax rate in future periods. The Company does not expect a material change in gross unrecognized benefits in the next twelve months. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:


Unrecognized Tax Benefits (in millions)	Amount
Balance at December 31, 2014	$	6.7
Changes in tax positions of prior years, net		1.5
Additions from unrecognized tax benefits acquired		14.4
Reductions for lapse of statute of limitations		(0.5)
Balance at December 31, 2015		22.1
Changes in tax positions of prior years, net		(1.1)
Reductions for lapse of statute of limitations		(0.6)
Balance at December 31, 2016		20.4
Changes in tax positions of prior years, net		1.1
Reductions for lapse of statute of limitations		(0.1)
Revaluation of unrecognized tax benefits due to the Tax Act (1)		(5.5)
Balance at December 31, 2017	$	15.9

(1)

Amount relates to the impact of applying the Tax Act during the year ended December 31, 2017.

Included in the balance of unrecognized tax benefits at December 31, 2017 are potential benefits of $8.2 million that, if recognized, would affect the effective tax rate. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits in income taxes. To the extent interest and penalties are not ultimately assessed with respect to the settlement of uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision. Interest accrued related to the balance of unrecognized tax benefits totaled $0.5 million and $0.4 million as of December 31, 2017 and 2016, respectively.

The Company is no longer subject to U.S. federal income tax audits for years before 2013. The Company is routinely involved in state, local income and excise tax audits, and foreign tax audits.