INCOME TAXES

The Company's deferred income taxes reflect the value of its net operating loss carryforwards and the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their amounts used for income tax calculations. Federal legislation known as the The Tax Cuts and Jobs Acts ("Tax Act") was enacted on December 22, 2017. The Tax Act reduces the U.S. federal corporate tax rate from the previous rate of 35% to 21% effective January 1, 2018. The Tax Act also makes broad and complex changes to the U.S. tax code, including, but not limited to a one time tax on earnings of certain foreign subsidiaries, limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017, bonus depreciation for full expensing of qualified property, and limitations on the deductibility of certain executive compensation. At December 31, 2017, the Company calculated the effects of the enactment of the Tax Act as written, and made a reasonable estimate of the effects on the existing deferred tax balances. The Company will continue to refine the calculations as additional analysis is completed and the Company gains a more thorough understanding of the Tax Act, including the tax law related to the deductibility of purchased assets, state tax treatment, and amounts related to employee compensation. The re-measurement of deferred tax balances using the lower federal rates enacted by the Tax Act, resulted in a reduction in the Company's net deferred tax liability and the recognition of a deferred tax benefit as depicted by the change in federal statutory tax rate included below.

At December 31, 2017, the Company had cumulative net operating loss carryforwards (“NOL CFs”) for federal income tax purposes of approximately $57.6 million, which begin to expire in 2031 if not utilized before then. The deferred tax asset balance includes $1.8 million net of a $0.3 million valuation allowance related to state NOL CFs, which have remaining lives ranging from one to twenty years. These NOL CFs are attributable to excess tax deductions related primarily to the accelerated tax depreciation of fixed assets and cash contributions for its defined benefit pension plans. At December 31, 2017 and 2016, the Company determined that, based upon projections of taxable income, it was more likely than not that the NOL CF’s will be realized prior to their expiration, accordingly, no allowance against these deferred tax assets was recorded.

The significant components of the deferred income tax assets and liabilities as of December 31, 2017 and 2016 are as follows (in thousands):



	December 31
	2017			2016
Deferred tax assets:
Net operating loss carryforward and federal credits	$	17,021		$	20,596
Warrants	3,974			4,746
Post-retirement employee benefits	8,716			27,060
Employee benefits other than post-retirement	9,229			13,785
Inventory reserve	1,739			2,727
Deferred revenue	3,016			7,728
Other	4,317			4,411
Deferred tax assets	48,012			81,053
Deferred tax liabilities:
Accelerated depreciation	(129,201		)	(186,015		)
Partnership items	(5,858		)	(8,777		)
State taxes	(12,119		)	(8,564		)
Valuation allowance against deferred tax assets	(278		)	(229		)
Deferred tax liabilities	(147,456		)	(203,585		)
Net deferred tax (liability)	$	(99,444	)	$	(122,532	)

The following summarizes the Company’s income tax provisions (benefits) (in thousands):



	Years Ended December 31
	2017			2016		2015
Current taxes:
Federal	$	9		$	820	$	524
Foreign	48			—		—
State	590			151		371
Deferred taxes:
Federal	27,625			11,338		21,073
Foreign	—			—		—
State	3,396			1,085		1,440
Change in federal statutory tax rates	(59,944		)	—		—
Total deferred tax expense	(28,923		)	12,423		22,513
Total income tax expense (benefit) from continuing operations	$	(28,276	)	$	13,394	$	23,408
Income tax expense (benefit) from discontinued operations	$	(1,848	)	$	1,384	$	1,178

The reconciliation of income tax from continuing operations computed at the U.S. statutory federal income tax rates to effective income tax rates is as follows:



	Years Ended December 31
	2017		2016		2015
Statutory federal tax rate	35.0	%	35.0	%	35.0	%
Foreign income taxes	(0.5	)%	—	%	—	%
State income taxes, net of federal tax benefit	(39.7	)%	2.3	%	1.9	%
Tax effect of non-deductible warrant expense	(485.0	)%	4.0	%	—	%
Tax effect of stock compensation	21.7	%	(3.4	)%	—	%
Tax effect of other non-deductible expenses	(19.6	)%	1.6	%	0.9	%
Change in federal statutory tax rates	917.2	%	—	%	—	%
Other	3.5	%	(0.6	)%	(0.4	)%
Effective income tax rate	432.6	%	38.9	%	37.4	%

The income tax deductibility of the warrant expense is less than the expense required by GAAP because for tax purposes, the warrants are valued at a different time and under a different valuation method.

The reconciliation of income tax from discontinued operations computed at the U.S. statutory federal income tax rates to effective income tax rates is as follows:



	Years Ended December 31
	2017		2016		2015
Statutory federal tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal tax benefit	1.3	%	1.3	%	1.3	%
Change in federal statutory tax rates	—	%	—	%	—	%
Effective income tax rate	36.3	%	36.3	%	36.3	%

The Company files income tax returns in the U.S. federal jurisdiction and various international, state and local jurisdictions. The returns may be subject to audit by the Internal Revenue Service (“IRS”) and other jurisdictional authorities. International returns consist primarily of disclosure returns where the Company is covered by the sourcing rules of U.S. international treaties. The Company recognizes the impact of an uncertain income tax position 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. At December 31, 2017, 2016 and 2015, the Company's unrecognized tax benefits were $0.0 million, $0.0 million and $0.0 million respectively. Accrued interest and penalties on tax positions are recorded as a component of interest expense. Interest and penalties expense was immaterial for 2017, 2016 and 2015.

The Company began to file, effective in 2008, federal tax returns under a common parent of the consolidated group that includes ABX and all the wholly-owned subsidiaries, except for Pemco which was acquired on December 30, 2016. The returns for 2016, 2015 and 2014 related to the consolidated group remain open to examination. The consolidated federal tax returns prior to 2014 remain open to federal examination only to the extent of net operating loss carryforwards carried over from or utilized in those years. Pemco filed returns on its own behalf prior to its acquisition by the Company. State and local returns filed for 2005 through 2016 are generally also open to examination by their respective jurisdictions, either in full or limited to net operating losses.