Income Taxes

12 Months Ended

Dec. 31, 2019

The Company files a consolidated U.S. federal income tax return and various state income tax returns. The provision for the federal and state income taxes attributable to income (loss) consists of the following components:



	Years Ended December 31,
(in thousands)	2019			2018			2017
Current (benefit) expense
Federal taxes	$	(1,205	)	$	2,875		$	1,552
State taxes	5,665			6,434			(630		)
Total current provision	4,460			9,309			922
Deferred expense (benefit)
Federal taxes	12,183			6,708			(52,886		)
State taxes	(539		)	(500		)	(1,169		)
Total deferred provision	11,644			6,208			(54,055		)
Income tax expense (benefit)	$	16,104		$	15,517		$	(53,133	)
Effective tax rate	22.7		%	25.0		%

A reconciliation of income taxes determined by applying the federal and state tax rates to income (loss) is as follows:



	Years Ended December 31,
(in thousands)	2019			2018			2017
Expected tax expense at federal statutory	$	14,918		$	13,044		$	4,640
State income taxes, net of federal tax effect	4,709			4,748			(1,129		)
Revaluation of U.S. deferred income taxes	—			(760		)	(53,449		)
Excess tax benefit from share based compensation and other, net	(3,523		)	(1,515		)	(3,195		)
Income tax expense (benefit)	$	16,104		$	15,517		$	(53,133	)

The effective tax rate in 2019 decreased slightly from 2018, primarily as a result of the larger discrete excess tax benefit from share based compensation and other, net. Deferred taxes were revalued in 2017 to reflect the change from a 35% federal statutory rate to 21% as a result of the 2017 Tax Cut and Jobs Act. As a result, the effective tax rate in 2017 is not meaningful.

The Company's cash payments for income taxes were $9.5 million in the year ended December 31, 2019. The Company received cash refunds for income taxes of $2.7 million in the year ended December 31, 2018.

Deferred tax assets and liabilities are measured using enacted tax rates that are expected to apply in the year of reversal or settlement and arise from temporary differences between the US GAAP and tax bases of the following assets and liabilities:



(in thousands)	December 31, 2019		December 31, 2018
Deferred tax assets:
Leases	$	106,564	$	—
Asset retirement obligations	9,957		7,797
Net operating loss carry-forwards	10,071		12,612
Pension liabilities	3,161		2,873
Accruals and stock based compensation	1,935		6,545
Other	1,408		—
Total gross deferred tax assets	133,096		29,827
Less valuation allowance	—		(862		)
Net deferred tax assets	133,096		28,965

Deferred tax liabilities:
Property, plant and equipment	110,297		99,902
Leases	105,475		—
Intangible assets	27,201		32,727
Prepaid assets and other	26,574		23,789
Total gross deferred tax liabilities	269,547		156,418
Net deferred tax liabilities	$	136,451	$	127,453

In assessing the ability to realize deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon generating future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, taxable income in prior carryback years if available and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods for which the deferred tax assets are deductible, the Company believes it more likely than not that the net deferred tax assets will be realized.

The Company has a deferred tax asset of $10.1 million related to federal and various state net operating losses. As of December 31, 2019, the Company had approximately $46.2 million of federal net operating losses expiring through 2027. The Company also had approximately $19.0 million of state net operating losses expiring through 2036.

As of December 31, 2019 and 2018, the Company had no unrecognized tax benefits.

The Company is not currently subject to state or federal income tax audits as of December 31, 2019. The Company's returns are generally open to examination from 2016 forward and the net operating losses acquired from nTelos are open to examination from 2002 forward.