Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

The provision for income taxes consists of the following:



	Year Ended December 31,
	2017			2016			2015
Current:
Federal	$	211,641		$	209,454		$	180,895
State	37,006			38,095			36,142
Deferred:
Federal	60,785			(9,230		)	2,681
State	(42		)	(1,884		)	567
	$	309,390		$	236,435		$	220,285

Income Tax Benefits in Shareholders' Equity

In addition to amounts applicable to income before taxes, the following income tax benefits were recorded in shareholders’ equity:



	Year Ended December 31,
	2017		2016		2015
Income tax benefits arising from compensation expense for tax purposes in excess of amounts recognized for financial statement purposes (1)	$	—	$	13,661	$	23,311

(1) During 2017, these income tax benefits were recognized in the consolidated statement of income as required under ASU 2016-09.

Deferred Income Taxes on Consolidated Balance Sheets

Deferred income taxes on NVR’s consolidated balance sheets were comprised of the following:



	December 31,
	2017		2016
Deferred tax assets:
Other accrued expenses and contract land deposit reserve	$	49,063	$	76,498
Deferred compensation	4,743		7,075
Equity-based compensation expense	36,799		55,077
Inventory	9,393		13,514
Unrecognized tax benefit	14,351		23,954
Other	9,681		10,106
Total deferred tax assets	124,030		186,224
Less: Deferred tax liabilities	4,511		5,414
Net deferred tax asset	$	119,519	$	180,810

Income Tax Expense Reconciliation

A reconciliation of income tax expense in the accompanying consolidated statements of income to the amount computed by applying the statutory federal income tax rate of 35% to income before taxes is as follows:



	Year Ended December 31,
	2017			2016			2015
Income taxes computed at the federal statutory rate	$	296,419		$	231,595		$	211,124
State income taxes, net of federal income tax benefit (1)	30,046			23,738			23,919
Excess tax benefits from equity-based compensation	(58,681		)	—			—
Remeasurement of net deferred tax assets due to enactment of Tax Cut and Jobs Act	62,702			—			—
Other, net (2)	(21,096		)	(18,898		)	(14,758		)
	$	309,390		$	236,435		$	220,285


(1)	Excludes state excess tax benefits from equity-based compensation included in the line below.


(2)	Primarily attributable to tax benefits from the domestic production activities deduction.

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



	Year Ended December 31,
	2017			2016
Balance at beginning of year	$	46,110		$	46,591
Additions based on tax positions related to the current year	4,793			4,440
Reductions for tax positions of prior years	(5,566		)	(4,921		)
Settlements	—			—
Balance at end of year	$	45,337		$	46,110