Income Taxes

Income tax (benefit) expense attributable to income from operations differed from the amount computed by applying the statutory federal income tax rate of 21% as of March 31, 2018 and 35% as of March 31, 2017 to pre-tax income or loss as a result of the following:



	Three Months Ended March 31,
	2018			2017
Tax at the federal statutory rate	$	107		$	2,326
State income taxes (net of federal benefit)	22			233
2017 qualified timber gains at the federal statutory rate of 23.8% ⁽¹⁾	(345		)	—
Decrease in valuation allowance	(33		)	(280		)
Total income tax (benefit) expense	$	(249	)	$	2,279



(1)	The Bipartisan Budget Act of 2018 was signed into law on February 9, 2018 (the “2018 Act”). The 2018 Act retroactively re-established the preferential 23.8% tax rate on C Corporation Qualified Timber Gains, extending its applicability from 2016 to include the 2017 tax year. The benefit of this retroactive tax rate reduction is being included in 2018 income from continuing operations.

As of March 31, 2018 and December 31, 2017, the Company had state net operating loss carryforwards of $388.7 million and $391.7 million, respectively and no federal net operating loss carryforwards. The majority of state net operating losses are available to offset future taxable income through 2038. As of both March 31, 2018 and December 31, 2017, the Company had an income tax receivable of $8.4 million related to the reclassification of a federal AMT credit carryforward following the enactment of the Tax Act in December 2017, which 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 March 31, 2018 and December 31, 2017, based on the timing of the reversal of future taxable amounts and the Company’s history, management did not believe it met the requirements to realize the benefits of certain of its deferred tax assets; therefore, the Company has maintained a valuation allowance of $4.9 million and $5.0 million, respectively.

The Company had approximately $2.1 million of total unrecognized tax benefits as of both March 31, 2018 and December 31, 2017. 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.