Income Taxes (Tables)

9 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

Major Jurisdictions

The following are the major jurisdictions in which Ambac and its subsidiaries operate and the earliest tax years subject to examination:

Jurisdiction	Tax Year
United States	2010
New York State	2013
New York City	2013
United Kingdom	2015
Italy	2013

Significant Portions of Deferred Tax Liabilities and Deferred Tax Assets

The tax effects of temporary differences that give rise to significant portions of the deferred tax liabilities and deferred tax assets at September 30, 2018 and December 31, 2017 are presented below:

	September 30, 2018			December 31, 2017
Deferred tax liabilities:
Insurance intangible	$	158,704		$	177,864
Debentures	—			28,387
Unearned premiums and credit fees	50,386			51,485
Variable interest entities	17,265			22,817
Investments	51,704			28,798
Other	9,507			9,402
Total deferred tax liabilities	287,566			318,753
Deferred tax assets:
Net operating loss and capital carryforward	745,419			775,917
Loss reserves	230,768			264,624
Debentures	24,219			—
Compensation	7,935			5,585
Other	1,819			2,140
Subtotal deferred tax assets	1,010,160			1,048,266
Valuation allowance	750,131			763,172
Total deferred tax assets	260,029			285,094
Net deferred tax (liability)	$	(27,537	)	$	(33,659	)

Schedule of Income before Income Tax, Domestic and Foreign [Table Text Block]

U.S. and foreign components of pre-tax income (loss) were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018		2017
U.S.	$	(39,832	)	$	(211,769	)	$	271,014	$	(428,263	)
Foreign	19,884			26,303			23,655		150,929
Total	$	(19,948	)	$	(185,466	)	$	294,669	$	(277,334	)

Schedule of Components of Income Tax Expense (Benefit)

The components of the provision for income taxes were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Current taxes
U. S. federal	$	—		$	(617	)	$	—		$	—
U.S. state and local	424			—			2,106			—
Foreign	6,164			6,056			8,669			31,902
Current taxes	6,588			5,439			10,775			31,902
Deferred taxes
Foreign	(4,377		)	—			(3,964		)	—
Deferred taxes	(4,377		)	—			(3,964		)	—
Provision for income taxes	$	2,211		$	5,439		$	6,811		$	31,902

Schedule of Net Operating Loss And Tax Credit Carryovers

Pursuant to the intercompany tax sharing agreement, to the extent Ambac Assurance generates taxable income after September 30, 2011, which is offset with "Allocated NOLs" of $3,650,000, it is obligated to make payments (“Tolling Payments”), subject to certain credits, to Ambac in accordance with the following NOL usage table, where the “Applicable Percentage” is applied to the aggregate amount of federal income tax liability that would have been paid if the Allocated NOLs were not available. Pursuant to the Closing Agreement between Ambac and the Internal Revenue Service ("IRS"), the IRS will receive 12.5% of Tier C and 17.5% of Tier D payments, if made.

NOL Usage Table

NOL Usage Tier	Allocated NOLs			Applicable Percentage
A	The first	$479,000		15%
B	The next	$1,057,000	after Tier A	40%
C	The next	$1,057,000	after Tier B	10%
D	The next	$1,057,000	after Tier C	15%