INCOME TAXES

Income tax expense (benefit) consisted of the following:



	Federal		State			Total
2017
Current	$	—	$	3		$	3
Deferred	32,652		707			33,359
Total	$	32,652	$	710		$	33,362
2016
Current	$	130	$	2		$	132
Deferred	26,603		81			26,684
Total	$	26,733	$	83		$	26,816
2015
Current	$	9,591	$	1,706		$	11,297
Deferred	15,374		(1,382		)	13,992
Total income tax	$	24,965	$	324		$	25,289

The Company's 2017, 2016 and 2015 federal qualified repairs and maintenance deductions totaled $85.7 million, $84.9 million, and $65.2 million, respectively.

The total federal NOL carry-forward was $72.6 million and the state NOL carry-forward was $55.4 million as of December 31, 2017. Management has concluded that the NOL carry-forward amounts are more likely than not to be recovered and therefore require no valuation allowance. The loss and credit carry-forward will begin to expire in 2032.

As of December 31, 2017, the California Enterprise Zone (EZ) credit was $4.2 million net of federal tax benefit for qualified property purchased before January 1, 2015, and placed in service before January 1, 2016. The Company has carry-forward California EZ credits of $2.3 million net of any unrecognized tax benefit. Unused State of California EZ credits can carry-forward until 2024.

The difference between the recorded and the statutory income tax expense was reconciled in the table below:



	2017			2016			2015
Statutory income tax	$	35,190		$	26,422		$	24,607
Increase (reduction) in taxes due to:
State income taxes net of federal tax benefit	5,781			4,341			4,043
Effect of regulatory treatment of fixed asset differences	(4,584		)	(4,298		)	(3,450		)
Investment tax credits	(74		)	(74		)	(74		)
AFUDC equity	(1,528		)	—			—
Share base stock compensation	(581		)	—			—
Other	(842		)	425			163
Total income tax	$	33,362		$	26,816		$	25,289

The effect of regulatory treatment of fixed asset differences includes estimated repair and maintenance deductions and asset related flow through items.

On December 22, 2017, the U.S. government enacted expansive tax legislation commonly referred to as the TCJA. Among other provisions, the TCJA reduces the federal income tax rate from 35 percent to 21 percent beginning on January 1, 2018 and eliminated bonus depreciation for utilities. The TCJA required the Company to re-measure all existing deferred income tax assets and liabilities to reflect the reduction in the federal tax rate. The Company made reasonable estimates to reflect the impacts of the TCJA and recorded provisional amounts, in accordance with rules issued by the SEC in Staff Accounting Bulletin No. 118, for the re-measurement of deferred tax balances as of December 31, 2017.

During the three months and year ended December 31, 2017, the Company recorded a provisional re-measurement of its deferred tax balances (related mostly to timing differences for plant-related items) which was offset by a change from a net deferred income tax regulatory asset to a net regulatory liability. The Company is working with state regulators to finalize the ratepayer net refund of $108.0 million to ensure compliance with federal normalization rules.

The final transition impacts of the TCJA may differ from the recorded amounts, possibly materially, due to, among other things, regulatory decisions that could differ from the Company’s determination of how the impacts of the TCJA are allocated between customers and shareholders. In addition, while the Company was able to make reasonable estimates of the impact of the reduction in federal tax rate and the elimination of bonus depreciation due to the enactment of the TCJA; the Company has not completed analysis for areas of the TCJA around Internal Revenue Code Section 162(m), full expensing of fixed assets, and other asset related items of the TCJA. Changes in interpretations, guidance on legislative intent, and any changes in accounting standards for income taxes in response to the TCJA could impact the recorded amounts. The Company will finalize and record any adjustments related to the TCJA within the one year measurement period provided under Staff Accounting Bulletin No. 118.

The deferred tax assets and deferred tax liabilities as of December 31, 2017 and 2016, were presented in the following table:



	2017		2016
Deferred tax assets:
Developer deposits for extension agreements and contributions in aid of construction	$	33,552	$	46,318
Net operating loss carryforward and tax credits	13,329		12,348
Pension	7,906		9,865
Income tax regulatory liability	41,712		—
Other	280		5,651
Total deferred tax assets	96,779		74,182
Deferred tax liabilities:
Property related basis and depreciation differences	262,442		347,071
WRAM/MCBA and interim rates balancing accounts	24,733		20,714
Other	2,550		5,321
Total deferred tax liabilities	289,725		373,106
Net deferred tax liabilities	$	192,946	$	298,924

The decreases in developer deposits for extension agreements and contributions in aid of construction and property related basis and depreciation differences, as compared to the prior year, were mostly due to the re-measurement of deferred tax balances as required by the TCJA. The increase in the deferred tax asset for the income tax regulatory liability represents the tax gross up to the revenue requirement for the re-measurement of net deferred taxes associated with a lower federal income tax rate as a result of the TCJA, as well as the future tax benefit associated with the expected reduction in revenue.

A valuation allowance was not required at December 31, 2017 and 2016. Based on historical taxable income and future taxable income projections over the period in which the deferred assets are deductible, management believes it is more likely than not that the Company will realize the benefits of the deductible differences.

The following table reconciles the changes in unrecognized tax benefits:



	December 31, 2017		December 31, 2016		December 31, 2015
Balance at beginning of year	$	10,499	$	10,298	$	7,916
Additions for tax positions taken during prior year	—		—		—
Additions for tax positions taken during current year	559		201		2,382
Reductions for tax positions taken during a prior year	—		—		—
Lapse of statute of limitations	—		—		—
Balance at end of year	$	11,058	$	10,499	$	10,298

The Company does not expect a material change in its unrecognized tax benefits within the next 12 months. The component of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of December 31, 2017, for the Company was $2.1 million, with the remaining balance representing the potential deferral of taxes to later years.

The Company's federal income tax years subject to an examination are from 2013 to 2017 and the state income tax years subject to an examination are from 2012 to 2017.