Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

The provision for income taxes consists of the following:



	Year Ended December 31,
	2018			2017			2016
Current:
Federal	$	126,358		$	211,641		$	209,454
State	37,038			37,006			38,095
Deferred:
Federal	138			60,785			(9,230		)
State	(999		)	(42		)	(1,884		)
Income tax expense	$	162,535		$	309,390		$	236,435

Deferred Income Taxes on Consolidated Balance Sheets

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



	December 31,
	2018		2017
Deferred tax assets:
Other accrued expenses and contract land deposit reserve	$	51,316	$	49,063
Deferred compensation	4,693		4,743
Equity-based compensation expense	40,744		36,799
Inventory	9,242		9,393
Unrecognized tax benefit	13,587		14,351
Other	5,113		9,681
Total deferred tax assets	124,695		124,030
Less: Deferred tax liabilities	6,091		4,511
Net deferred tax asset	$	118,604	$	119,519

Income Tax Expense Reconciliation

A reconciliation of income taxes computed at the federal statutory rate (21% in 2018 and 35% in 2017 and 2016) to income tax expense is as follows:



	Year Ended December 31,
	2018			2017			2016
Income taxes computed at the federal statutory rate	$	201,544		$	296,419		$	231,595
State income taxes, net of federal income tax benefit (1)	42,944			30,046			23,738
Excess tax benefits from equity-based compensation (2)	(77,478		)	(58,681		)	—
Remeasurement of net deferred tax assets due to enactment of Tax Cut and Jobs Act (3)	(497		)	62,702			—
Other, net (4)	(3,978		)	(21,096		)	(18,898		)
Income tax expense	$	162,535		$	309,390		$	236,435


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


(2)	ASU 2016-09 adopted January 1, 2017. Excess tax benefits related to equity-based compensation of $13,661 in 2016 were recorded to shareholders' equity.


(3)	The enactment of the Tax Cuts and Jobs Act in December 2017 required a remeasurement of the Company's net deferred tax assets and resulted in additional income tax expense of $62,702.

(4)

Primarily attributable to tax benefits from certain energy credits for the year ended December 31, 2018. For the years ended December 31, 2017 and 2016, this was primarily attributable to tax benefits from the domestic production activities deduction. The domestic production activities deduction was eliminated effective January 1, 2018, following the enactment of the Tax Cuts and Jobs Act in December 2017.

Reconciliation of Unrecognized Tax Benefits

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



	Year Ended December 31,
	2018			2017
Balance at beginning of year	$	45,337		$	46,110
Additions based on tax positions related to the current year	4,340			4,793
Reductions for tax positions of prior years	(6,259		)	(5,566		)
Settlements	—			—
Balance at end of year	$	43,418		$	45,337