Income Taxes

Income tax (benefit) expense for the years ended December 31, 2017, 2016, and 2015 consist of the following:



	2017			2016			2015
Current:
Federal	$	7,418		$	(22,416	)	$	(1,377	)
State	48			(64		)	(138		)
Total	7,466			(22,480		)	(1,515		)
Deferred:
Federal	(23,512		)	29,796			2,261
State	(1,835		)	(169		)	62
Total	(25,347		)	29,627			2,323
Income tax (benefit) expense	$	(17,881	)	$	7,147		$	808

Total income tax (benefit) expense for the years ended December 31, 2017, 2016, and 2015 was allocated in the consolidated financial statements as follows:



	2017			2016		2015
Income tax (benefit) expense	$	(17,881	)	$	7,147	$	808
Income tax recorded in accumulated other comprehensive (loss) income
Income tax (benefit) expense	(2,488		)	2,003		(300		)
Total income tax (benefit) expense	$	(20,369	)	$	9,150	$	508

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



	2017			2016			2015
Tax at the statutory federal rate	$	14,594		$	8,065		$	(323	)
State income taxes (net of federal benefit)	1,340			806			(32		)
Decrease in valuation allowance, net	(142		)	(941		)	(164		)
Fees and expenses for SEC investigation	—			—			1,092
Change in statutory federal rate to 21%	(33,542		)	—			—
Dividend received deduction	(530		)	(40		)	—
Other	399			(743		)	235
Total income tax (benefit) expense	$	(17,881	)	$	7,147		$	808

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities as of December 31, 2017 and 2016 are presented below:



	2017			2016
Deferred tax assets:
State net operating loss carryforwards	$	17,237		$	14,956
Alternative minimum tax credit carryforward	—			13,477
Impairment losses	41,837			63,108
Prepaid income from land sales	3,734			5,461
Other	322			—
Total gross deferred tax assets	63,130			97,002
Valuation allowance	(4,993		)	(5,135		)
Total net deferred tax assets	58,137			91,867
Deferred tax liabilities:
Investment in real estate and property and equipment basis differences	525			647
Deferred gain on land sales and involuntary conversions	19,671			28,920
Installment sales	85,769			127,260
Pension Plan assets transferred to the 401(k) Plan	1,155			2,170
Other	—			1,716
Total gross deferred tax liabilities	107,120			160,713
Net deferred tax liabilities	$	(48,983	)	$	(68,846	)

As of December 31, 2017 and 2016, the Company had state net operating loss carryforwards of $391.7 million and $427.3 million, respectively and no federal net operating loss carryforwards. The majority of state net operating losses are available to offset future taxable income through 2037. The Company had a federal AMT credit carryforward of $13.5 million as of December 31, 2016. During 2017, $5.1 million of the AMT credit was utilized, leaving a remaining balance of $8.4 million as of December 31, 2017. This AMT credit was reclassified as an income tax receivable following the enactment of the Tax Act in December 2017 and is refundable to the Company in the years 2018 through 2021.

The Tax Act was enacted on December 22, 2017 and changed many aspects of U.S. corporate income taxation including reducing the U.S. federal corporate tax rate from 35% to 21% for tax years beginning after December 31, 2017. The Company recognized the tax effects of the Tax Act during the year ended December 31, 2017, which included a $33.5 million income tax benefit from the reassessment of net deferred tax balances to reflect the newly enacted tax rate.

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, 2017 and 2016, based on the timing of reversal of future taxable amounts and the Company’s history of losses, management believes it has not met the requirements to realize the benefits of certain of its deferred tax assets; therefore, the Company has maintained a valuation allowance of $5.0 million and $5.1 million, respectively. As of December 31, 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 $5.0 million for these deferred tax assets.

The Company had approximately $1.7 million of total unrecognized tax benefits as of both December 31, 2017 and 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 2017. In addition, the Company received a federal tax refund for 2016 of $4.4 million during 2017.

There were no penalties required to be accrued at December 31, 2017 and 2016. The Company recognizes interest and/or penalties related to income tax matters in income tax benefit (expense).

The Company is currently open to examination by taxing authorities for the years ended December 31, 2015 through 2017. Our federal income tax returns for 2016 and 2015 are currently under a limited scope review by the Internal Revenue Service (the “IRS”). The IRS has completed the examination of the Company’s tax return for 2014 without adjustment.