Income Taxes

We are not a taxable entity for federal income tax purposes. As such, we do not directly pay federal income taxes. Other than with respect to our corporate subsidiaries and the Texas Margin Tax, our taxable income or loss is includible in the federal income tax returns of each of our partners.

A few of our operations are owned by wholly-owned corporate subsidiaries that are taxable as corporations. We pay federal and state income taxes on these operations.

The Tax Cuts and Jobs Act (“Act”) was enacted on December 22, 2017. The Act contains several tax law changes that will impact the Partnership in the current and future periods, including a reduction in the U.S. federal corporate tax rate from 35% to 21%. At December 31, 2017, the Partnership has not completed its accounting for the tax effects of the Act; however, in certain cases, as described below, the Partnership has made a reasonable estimate of the effects on our existing deferred tax balances.

The Partnership remeasured its U.S. deferred tax assets and liabilities and recorded a $5.3 million benefit relating to the U.S. federal corporate tax rate change.

Our income tax (benefit) expense is as follows:



	Year Ended December 31,
	2017			2016		2015
Current:
Federal	$	—		$	—	$	—
State	100			1,200		1,200
Total current income tax expense (benefit)	$	100		$	1,200	$	1,200
Deferred:
Federal	$	(5,530	)	$	1,862	$	2,478
State	1,471			280		309
Total deferred income tax expense (benefit)	$	(4,059	)	$	2,142	$	2,787
Total income tax expense (benefit)	$	(3,959	)	$	3,342	$	3,987

Deferred income taxes relate to temporary differences based on tax laws and statutory rates that were enacted at the balance sheet date. Deferred tax assets and liabilities consist of the following:



	December 31,
	2017			2016
Deferred tax assets:
Net operating loss carryforwards	$	9,506		$	10,787
Total long-term deferred tax asset	9,506			10,787
Valuation allowances	(1,285		)	(869		)
Total deferred tax assets	$	8,221		$	9,918
Deferred tax liabilities:
Long-term:
Fixed assets	$	(3,896	)	$	(4,480	)
Intangible assets	(15,797		)	(20,693		)
Other	(441		)	(716		)
Total long-term liability	(20,134		)	(25,889		)
Total deferred tax liabilities	$	(20,134	)	$	(25,889	)
Total net deferred tax liability	$	(11,913	)	$	(15,971	)

We record a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets depends on the ability to generate sufficient taxable income of the appropriate character in the future and in the appropriate taxing jurisdictions.

The reconciliation between the Partnership's effective tax rate on income (loss) from operations and the statutory tax rate is as follows:



	Year Ended December 31,
	2017			2016			2015
Income from operations before income taxes	$	78,120		$	114,424		$	425,572
Partnership income not subject to federal income tax	(77,704		)	(109,111		)	(418,500		)
Income subject to federal income taxes	$	416		$	5,313		$	7,072
Tax expense at federal statutory rate	$	146		$	1,860		$	2,475
State income taxes, net of federal tax	1,396			949			928
Return to provision, federal and state	(163		)	(198		)	(193		)
Other	(68		)	731			777
Remeasurement of deferred taxes due to enacted tax rate change	(5,270		)	—			—
Income tax expense (benefit)	$	(3,959	)	$	3,342		$	3,987
Effective tax rate on income from operations before income taxes	(5		)%	3		%	1		%

At December 31, 2017, 2016 and 2015, we had no uncertain tax positions.