INCOME TAXES

During the fourth quarter of 2017, the U.S. government enacted the Tax Act. Among its many provisions, the Tax Act reduces the federal corporate tax rate from 35% to 21%, effective January 1, 2018. The change in tax law required the Company to revalue its existing net deferred tax liability using the lower rate in the period of enactment resulting in the recognition of an income tax benefit of $81.3 million for the year ended December 31, 2017 related to that revaluation. As a result, the Company recognized an overall income tax benefit of $57.7 million for the year ended December 31, 2017.

Also during the fourth quarter of 2017, the SEC issued Staff Accounting Bulletin 118 (SAB 118), which provides guidance on accounting for tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Act for which the accounting under ASC 740 is complete. While we were able to make reasonable estimates of the impact of the reduction in corporate rate, bonus depreciation expensing provisions, and impact of Sec 162(m) to our existing restricted stock grants, the final impact of the Tax Act may differ from these estimates, due to, among other things, changes in our interpretations and assumptions, additional guidance that may be issued by the IRS, and actions we may take.

A reconciliation of income tax expense (benefit), computed by applying the federal statutory rate to pre-tax income (loss) to our effective income tax expense (benefit) is as follows:



	2017			2016			2015
	(In thousands)
Income tax expense (benefit) computed by applying the statutory rate	$	21,059		$	(72,386	)	$	(582,508	)
State income tax expense (benefit), net of federal benefit	1,655			(5,687		)	(45,768		)
Deferred tax liability revaluation ⁽¹⁾	(81,307		)	—			—
Restricted stock shortfall	1,867			5,465			—
Statutory depletion and other	(952		)	1,414			1,328
Income tax benefit	$	(57,678	)	$	(71,194	)	$	(626,948	)

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(1)	In 2017, the revaluation from the Tax Act.

For the periods indicated, the total provision for income taxes consisted of the following:



	2017			2016			2015
	(In thousands)
Current taxes:
Federal	$	—		$	—		$	(20,612	)
State	5			15			(4		)
	5			15			(20,616		)
Deferred taxes:
Federal	(62,788		)	(62,923		)	(535,691		)
State	5,105			(8,286		)	(70,641		)
	(57,683		)	(71,209		)	(606,332		)
Total provision	$	(57,678	)	$	(71,194	)	$	(626,948	)

Deferred tax assets and liabilities are comprised of the following at December 31:



	2017			2016
	(In thousands)
Deferred tax assets:
Allowance for losses and nondeductible accruals	$	32,242		$	53,967
Net operating loss carryforward	153,746			190,603
Alternative minimum tax and research and development tax credit carryforward	5,409			5,409
	191,397			249,979
Deferred tax liability:
Depreciation, depletion, amortization, and impairment	(324,874		)	(440,690		)
Net deferred tax liability	(133,477		)	(190,711		)
Current deferred tax asset	—			25,211
Non-current—deferred tax liability	$	(133,477	)	$	(215,922	)

Realization of the deferred tax assets are dependent on generating sufficient future taxable income. Although realization is not assured, management believes it is more likely than not that the deferred tax asset will be realized. The amount of the deferred tax asset considered realizable, however, could be reduced in the near-term if estimates of future taxable income are reduced. At December 31, 2017, we have federal net operating loss carryforwards of approximately $587.9 million which expire from 2021 to 2037.

We file income tax returns in the U.S. federal jurisdiction and various states. We are no longer subject to U.S. federal tax examinations for years before 2016 or state income tax examinations by state taxing authorities for years before 2014. During 2014, we recognized a tax benefit relating to a research and development tax credit carryforward in conjunction with our BOSS drilling rig activities. Due to the nature and subjectivity surrounding the research and development credit and historical challenges by the IRS against companies who claim the credit, it was our belief that the full amount of the credit may not have been eventually allowed by the IRS once we were no longer in an AMT tax paying position. During 2017, our U.S federal tax returns for 2013, 2014, and 2015 were examined by the IRS and no additional tax was found to be due and the research and development tax credit carryforward was allowed in full. Accordingly, we no longer have any unrecognized tax benefits as of December 31, 2017.