Income Taxes

12 Months Ended

Dec. 31, 2019

(9) INCOME TAXES

The Company is subject to federal and applicable state corporate income taxes on its taxable ordinary income and capital gains. As a corporation taxed under Subchapter C of the Internal Revenue Code, the Company is able, and intends, to file a consolidated federal income tax return with corporate subsidiaries in which it holds 80% or more of the outstanding equity interest measured by both vote and fair value.

The following table sets forth the significant components of our deferred and other tax assets and liabilities as of December 31, 2019 and 2018.

(Dollars in thousands)	2019			2018
Goodwill and other intangibles	$	(45,595	)	$	(45,272	)
Provision for loan losses		19,198			25,790
Net operating loss carryforwards ⁽¹⁾		22,607			11,132
Accrued expenses, compensation, and other assets		1,701			1,844
Unrealized gains on other investments		(6,790	)		(2,024	)
Total deferred tax liability		(8,879	)		(8,530	)
Valuation allowance		(462	)		(255	)
Deferred tax liability, net		(9,341	)		(8,785	)
Taxes receivable		1,516			1,812
Net deferred and other tax liabilities	$	(7,825	)	$	(6,973	)

(1)	As of December 31, 2019, the Company and its subsidiaries had an estimated $89,687 of net operating loss carryforwards, $1,712 which expires at various dates between December 31, 2026 and December 31, 2035, and which had a net asset value of $22,145 as of December 31, 2019.

The components of our tax (provision) benefit for the years ended December 31, 2019, 2018, and 2017 were as follows.

(Dollars in thousands)	2019			2018			2017
Current
Federal	$	—		$	(2,797	)	$	15,613
State		519			(1,078	)		756
Deferred
Federal		(489	)		5,270			(4,169	)
Federal income tax rate change		—			—			17,279
State		(371	)		(1,464	)		6,747
Net (provision) benefit for income taxes	$	(341	)	$	(69	)	$	36,226

The following table presents a reconciliation of statutory federal income tax (provision) benefit to consolidated actual income tax (provision) benefit reported for the years ended December 31, 2019, 2018, and 2017.

(Dollars in thousands)	2019			2018			2017
Statutory Federal income tax (provision) benefit at 21% (35% in 2017)	$	(642	)	$	4,935		$	12,582
State and local income taxes, net of federal income tax benefit		(120	)		440			645
Revaluation of net operating losses		380			—			—
Change in effective state income tax rate		(891	)		(2,564	)		3,232
Change in state income tax accruals		640			—			—
Federal income tax rate change		—			—			17,279
Income attributable to non-controlling interest		309			—			—
Utilization of carry forwards		—			(910	)		2,284
Appreciation of Medallion Bank		—			(1,974	)		1,050
Other		(17	)		4			(846	)
Total income tax (provision) benefit	$	(341	)	$	(69	)	$	36,226

The Tax Cuts and Jobs Act, starting in 2018, reduced the Company’s corporate statutory income tax rate from 35% to 21%, but eliminated or increased certain permanent differences.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible pursuant to ASC 740. The Company considers the reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. The Company’s evaluation of the realizability of deferred tax assets must consider both positive and negative evidence. The weight given to the potential effects of positive and negative evidence is based on the extent to which it can be objectively verified. Based upon these considerations, the Company determined the necessary valuation allowance as of December 31, 2019.

The Company has filed tax returns in many states. Federal, New York State, New York City, and Utah state tax filings of the Company for the tax years 2016 through the present are the more significant filings that are open for examination.