(4) Income Taxes

The provision (benefit) for income taxes includes the following components (in thousands):


	Year ended December 31,
	2018		2017		2016
Current tax provision (benefit):
Federal	$	(21,598)	$	5,853	$	(3,801)
State		1,465		180		111
Foreign		1,575		—		—
		(18,558)		6,033		(3,690)
Deferred tax provision (benefit):
Federal		92,250		(166,890)		(77,430)
State		12,250		20,133		(6,106)
		104,500		(146,757)		(83,536)
Provision (benefit) for income taxes	$	85,942	$	(140,724)	$	(87,226)

The following is a reconciliation between a federal income tax rate of 21% for 2018 and 35% for 2017 and 2016 of income (loss) before income taxes and the effective tax rate which is derived by dividing the provision (benefit) for income taxes by the income (loss) before the provision for income (loss) taxes (in thousands):


	Year ended December 31,
	2018		2017		2016
Computed provision (benefit) for income taxes at the statutory rate	$	76,926	$	100,864	$	(87,084)
Increase (decrease) in income taxes resulting from:
State income tax provision (benefit), net of federal income tax benefit		12,711		7,778		(5,768)
Non-deductible expenses		1,956		3,230		3,552
Valuation allowance changes affecting the provision for income taxes		(1,187)		505		751
Foreign income taxes, net of federal & state benefit		1,192		—		—
Excess tax benefits from share-based compensation		(4,548)		(5,377)		—
Revaluation of net deferred taxes for the Tax Act		—		(246,845)		—
Other, net		(1,108)		(879)		1,323
Provision (benefit) for income taxes	$	85,942	$	(140,724)	$	(87,226)

For the year ended December 31, 2018, the Company released $1.2 million of valuation allowance against certain deferred tax assets primarily associated with ExpressJet state net operating losses and Company capital loss carry forwards. For the years ended December 31, 2017 and 2016, the Company recorded a $0.5 million and $0.8 million valuation allowance, respectively against certain deferred tax assets primarily associated with ExpressJet state net operating losses with a limited carry forward period. The decrease in the valuation allowance for 2018 was primarily based on changes in the Company's income tax projections and capital gains generated which reduced the amount of deferred tax assets that are anticipated to expire before the deferred tax assets may be utilized.

The Company recorded a $4.5 million and $5.4 million benefit from share-based compensation in 2018 and 2017, respectively, relating to ASU 2016-09 which, beginning in 2017, requires excess tax benefits and deficiencies to be recognized in the income tax provision during the period stock options are exercised and when stock awards vest.

The significant components of the Company’s net deferred tax assets and liabilities as of December 31, 2018 and 2017 are as follows (in thousands):


	As of December 31,
	2018		2017
Deferred tax assets:
Accrued benefits	$	32,462	$	31,651
Net operating loss carryforward		344,375		122,648
AMT credit carryforward		15,744		23,443
Aircraft credits		35,924		53,870
Accrued reserves and other		18,710		26,647
Total deferred tax assets		447,215		258,259
Valuation allowance		(9,455)		(10,642)
Deferred tax liabilities:
Accelerated depreciation		(955,919)		(666,637)
Total deferred tax liabilities		(955,919)		(666,637)
Net deferred tax liability	$	(518,159)	$	(419,020)

The Company’s deferred tax liabilities were primarily generated through accelerated depreciation, combined with shorter depreciable tax lives, allowed under the IRS tax code for purchased aircraft and support equipment compared to the Company’s depreciation policy under GAAP for such assets using the straight-line method (see note 1 Nature of Operations and Summary of Significant Accounting Policies).

The Company's valuation allowance is related to certain deferred tax assets with a limited carry forward period where the Company does not anticipate utilizing these deferred tax assets prior to the lapse of the carry forward period. The Company's AMT credit carryforward includes credits from prior acquisitions.

At December 31, 2018 and 2017, the Company had federal net operating losses of approximately $1,504.9 million and $491.4 million and state net operating losses of approximately $562.0 million and $302.5 million, respectively. The estimated effective tax rate applicable to the federal and state net operating losses at December 31, 2018 was 21.0% and 3.36%, respectively. The Company anticipated that the federal and state net operating losses will start to expire in 2030 and 2019, respectively. The Company has recorded a valuation allowance for state net operating losses the Company anticipates will expire before the benefit will be realized due to the limited carry forward periods. As of December 31, 2018 and 2017, the Company also had an alternative minimum tax credit of approximately $8.8 million and $23.4 million, respectively, which does not expire. Under the new Tax Cuts and Jobs Act of 2017 (“Tax Act”), the Company anticipates it will realize the alternative minimum tax credit either by offsetting regular tax due or as a refundable credit over the next three years.

Under ASC Topic 740, the accounting guidance related to uncertainty in tax positions requires that the impact of a tax position be recognized in the financial statements if that position is more likely than not of being sustained on audit, based on the technical merits of the position. A reconciliation of the beginning and ending amount of unrecognized tax benefits for the year ended December 31, 2018 is as follows (in thousands):


Unrecognized tax benefits at the beginning of year	$	2,223
Gross increases - current year tax positions		13,899
Gross increases - prior year tax positions		-
Gross decreases - prior year tax positions		(1,569)
Unrecognized tax benefits at end of year	$	14,553
Interest and penalties in year-end balance		-

The Company has not accrued any interest or penalties related to uncertain tax positions as of December 31, 2018, as the Company's tax attributes would offset the estimated interest and penalties.