14. Income Taxes

Income tax (benefit) expense consist of the following:


	Year Ended December 31,
	2018		2017		2016
Current:
Federal	$	4,305	$	7,418	$	(22,416)
State		—		48		(64)
Total		4,305		7,466		(22,480)
Deferred:
Federal		488		(23,512)		29,796
State		(5,529)		(1,835)		(169)
Total		(5,041)		(25,347)		29,627
Income tax (benefit) expense	$	(736)	$	(17,881)	$	7,147

Total income tax (benefit) expense was allocated in the consolidated financial statements as follows:


	Year Ended December 31,
	2018		2017		2016
Income tax (benefit) expense	$	(736)	$	(17,881)	$	7,147
Income tax recorded in accumulated other comprehensive loss
Income tax expense (benefit)		685		(2,488)		2,003
Total income tax (benefit) expense	$	(51)	$	(20,369)	$	9,150

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 December 31, 2018 and 35% as of December 31, 2017 and 2016 to pre-tax income or loss as a result of the following:


	Year Ended December 31,
	2018		2017		2016
Tax at the statutory federal rate	$	6,643	$	14,594	$	8,065
State income taxes (net of federal benefit)		1,392		1,340		806
Decrease in valuation allowance, net		(4,993)		(142)		(941)
Decrease in uncertain tax positions		(2,165)		—		—
Change in US tax law		(1,035)		(33,542)		—
Dividend received deduction		(322)		(530)		(40)
Other permanent items		(256)		399		(743)
Total income tax (benefit) expense	$	(736)	$	(17,881)	$	7,147

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities are presented below:


	December 31,		December 31,
	2018		2017
Deferred tax assets:
State net operating loss carryforwards	$	15,709	$	17,237
Impairment losses		38,844		41,837
Prepaid income from land sales		2,597		3,734
Capitalized costs		2,107		—
Other		3,508		322
Total gross deferred tax assets		62,765		63,130
Valuation allowance		—		(4,993)
Total net deferred tax assets		62,765		58,137
Deferred tax liabilities:
Investment in real estate and property and equipment basis differences		2,358		525
Deferred gain on land sales and involuntary conversions		19,109		19,671
Installment sales		83,268		85,769
Pension Plan assets transferred to the 401(k) plan		872		1,155
Other		1,473		—
Total gross deferred tax liabilities		107,080		107,120
Net deferred tax liabilities	$	(44,315)	$	(48,983)

As of December 31, 2018 and 2017, the Company had state net operating loss carryforwards of $357.0 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 December 31, 2017, the Company had an income tax receivable of $8.4 million related to the reclassification of a U.S. 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. During the year ended December 31, 2018, the U.S. federal AMT credit carryforward decreased $4.5 million to $3.9 million due to the expected utilization in 2018 offset by the 2018 enactment of the Qualified Timber Gain preferential rate and other items impacting the 2017 U.S. federal income tax return.

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.

In 2018, the Company reassessed its need for a valuation allowance by evaluating all available evidence, including but not limited to historical and projected pre-tax profits. Based on this assessment the Company determined it had the ability to fully realize the future benefit of its net operating loss carryforward and released the valuation allowance in full resulting in a $5.0 million tax benefit. As of December 31, 2017, the Company had a valuation allowance of $5.0 million.

The Company had no unrecognized tax benefits as of December 31, 2018 and approximately $2.1 million of total unrecognized tax benefits as of December 31, 2017. During 2018, the Company recognized a $2.1 million income tax benefit due to the expiration of the statute of limitations for the tax year covering the previously unrecognized tax benefits. There were no penalties required to be accrued as of December 31, 2018 and 2017. The Company records interest related to unrecognized tax benefits, if any, in interest expense and penalties in other income, net.

In December 2016, the Company entered into a JV 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.

The Company is currently open to examination by taxing authorities for the years ended December 31, 2015 through 2017. The IRS has completed a limited scope review of the Company’s tax returns for 2015 and 2016 without adjustment.