(5) Income Taxes

Income tax expense (benefit) for the years ended December 31 is as follows:


	2018		2017		2016
Current income tax expense	$	1,863	$	5,407	$	5,087
Deferred income tax expense (benefit)		20		(7,612)		777
Income tax expense (benefit)	$	1,883	$	(2,205)	$	5,864

A reconciliation of income taxes computed at the federal statutory rate to income tax (benefit) expense for the years ended December 31 is as follows:


	2018				2017				2016
			Percent of				Percent of				Percent of
			Pretax				Pretax				Pretax
	Amount		Income		Amount		Income		Amount		Income
Income taxes computed at the federal statutory rate	$	4,529	21.0	%	$	8,730	35.0	%	$	8,266	35.0	%
(Reduction) increase in taxes resulting from:
Benefit of reduced federal income tax rates		—	—			(7,447)	(29.9)			—	—
Statutory depletion in excess of cost depletion		(1,199)	(5.6)			(2,004)	(8.0)			(1,854)	(7.9)
Research and development tax credit		(1,775)	(8.2)			(1,433)	(5.7)			(167)	(0.7)
Manufacturing deduction		—	—			(674)	(2.7)			(666)	(2.8)
State income taxes, net of federal income tax benefit		178	0.8			235	0.9			202	0.9
Other		150	0.7			388	1.6			83	0.3
Income tax expense (benefit)	$	1,883	8.7	%	$	(2,205)	(8.8)	%	$	5,864	24.8	%

The $7,447 benefit of reduced federal income tax rates in 2017 resulted from the 2017 Tax Act, which was signed into law on December 22, 2017. The 2017 Tax Act reduced the enacted federal income tax rate for corporations from 35% to 21% beginning in 2018. Applying the lower federal income tax rate to the Company’s book to tax differences resulted in a one-time reduction to the Company’s deferred tax liabilities, net, recorded as an income tax benefit in the Consolidated Statements of Income in 2017. The research and development tax credit in 2018, 2017 and 2016 is associated with the ongoing construction of the St. Clair kiln project.

Components of the Company’s deferred tax liabilities and assets are as follows:


	December 31,		December 31,
	2018		2017
Deferred tax liabilities
Lime and limestone property, plant and equipment	$	11,219	$	11,023
Fair value liability of foreign exchange hedges		—		26
Natural gas interests drilling costs and equipment		1,475		1,622
		12,694		12,671
Deferred tax assets
Fair value liability of foreign exchange hedges		3		—
Other		326		297
		329		297
Deferred tax liabilities, net	$	12,365	$	12,374

Current income taxes are classified on the Company’s Consolidated Balance Sheets as follows:


Prepaid expenses and other current assets	$	—	$	1,394
Accrued expenses	$	54	$	—

The Company had no federal net operating loss carry forwards at December 31, 2018. The Company reduces deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is “more likely than not” that some portion or all of the deferred tax assets will not be realized. Deferred tax assets are considered fully recognizable because of the Company’s recent income history and expectations of income in the future. The Company’s federal income tax returns for the year ended December 31, 2015 and subsequent years remain subject to examination. The Company’s income tax returns in certain state income tax jurisdictions remain subject to examination for various periods for the year ended December 31, 2015 and subsequent years. The Company treats interest and penalties on income tax liabilities as income tax expense.