Income Taxes

Income tax expense differed from the amount computed by applying the federal statutory rate of 35% to pre-tax income or loss as a result of the following:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Tax at the federal statutory rate	$	3,005		$	1,280		$	11,167		$	6,424
State income taxes (net of federal benefit)	301			128			1,117			642
Tax effect of timber at the federal statutory rate of 23.8%	(194		)	(121		)	(420		)	(381		)
Decrease in valuation allowance	(250		)	(350		)	(846		)	(713		)
Other	(219		)	11			(187		)	(802		)
Total income tax expense	$	2,643		$	948		$	10,831		$	5,170

The Company had a federal AMT credit carryforward of $8.7 million and $13.5 million as of September 30, 2017 and December 31, 2016, respectively. The AMT credit carryforward is currently available indefinitely to offset future federal income tax liabilities. As of September 30, 2017 and December 31, 2016, the Company had state net operating loss carryforwards of $395.3 million and $427.3 million, respectively and no federal net operating loss carryforwards. The state net operating loss is available to offset future taxable income through 2036.

In general, a valuation allowance is recorded if, based on the available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. Realization of the Company’s deferred tax assets is dependent upon the Company generating sufficient taxable income in future years in the appropriate tax jurisdictions to obtain a benefit from the reversal of deductible temporary differences and from loss carryforwards.

As of December 31, 2016, based on the timing of reversal of future taxable amounts and the Company’s history of losses, management did not believe it met the requirements to realize the benefits of certain of its deferred tax assets; therefore, the Company had maintained a valuation allowance of $5.1 million. During the nine months ended September 30, 2017, the Company reversed $0.8 million of the valuation allowance that was recorded as of December 31, 2016. As of September 30, 2017, management believes it has not met the requirements to realize the benefits for a portion of its deferred tax assets for state net operating loss carryforwards; therefore, the Company has maintained a valuation allowance of $4.3 million for these deferred tax assets.

The Company had approximately $1.7 million of total unrecognized tax benefits as of both September 30, 2017 and December 31, 2016. Of this total, there are no amounts of unrecognized tax benefits that, if recognized, would affect the effective income tax rate. There were no decreases or increases related to prior year or current year tax positions.

In December 2016, the Company entered into a joint venture agreement, pursuant to which the Company sold to Windmark JV all of its interest in the Windmark Beach project. The sale of the Windmark Beach project created a net taxable loss for the Company in 2016. The loss was carried back to 2014 for a federal income tax refund of $21.9 million, which was received during the nine months ended September 30, 2017. In addition, the Company received a federal tax refund for 2016 of $4.4 million during the nine months ended September 30, 2017.