Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

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



	Year ended December 31,
	2017			2016
Gross balance - beginning of year	$	28,004		27,688
Additions based on tax positions of prior years	145			904
Additions based on tax positions related to the current year	2,903			4,347
Settlements with taxing authorities	—			—
Reductions for tax positions of prior years	(356		)	(3,088	)
Reductions based on tax positions related to the current year	—			—
Reductions due to lapse of applicable statutes of limitations	(2,275		)	(1,847	)
Gross balance - end of year	$	28,421		28,004

Schedule of Provision for Income Tax Expense (Benefit)

The provision for income taxes consists of the following components:



	Year ended December 31,
	2017			2016		2015
Current:
Federal	$	65,196		111,302		140,778
State	1,246			3,019		4,530
Foreign	(35		)	(13	)	23
Total current provision	66,407			114,308		145,331

Deferred:
Federal	(8,270		)	25,423		3,572
State	6,618			1,976		3,875
Foreign	108			(394	)	(398	)
Total deferred provision	(1,544		)	27,005		7,049
Provision for income tax expense	$	64,863		141,313		152,380

Schedule of Effective Income Tax Rate Reconciliation

The differences between the income tax provision computed at the statutory federal corporate tax rate and the financial statement provision for income taxes are shown below:



	Year ended December 31,
	2017		2016		2015
Tax expense at federal rate	35.0	%	35.0	%	35.0	%
Increase (decrease) resulting from:
Reduction of statutory federal rate (a)	(8.0	)	—		—
State tax, net of federal income tax benefit	1.6		1.1		1.0
Provision for uncertain federal and state tax matters	—		—		0.9
Tax credits	(1.3	)	(0.6	)	(0.5	)
Other	—		—		(0.1	)
Effective tax rate	27.3	%	35.5	%	36.3	%


(a)	The Tax Cuts and Jobs Act (the “Tax Act”), signed into law on December 22, 2017, changes existing United States tax law and includes numerous provisions that affect businesses, including the Company. The Tax Act, for instance, introduces changes that impact U.S. corporate tax rates, business-related exclusions, and deductions and credits.

The Company accounted for the change in tax laws in accordance with ASC Topic 740 that provides guidance that a change in tax law or rates be recognized in the financial reporting period that includes the enactment date, which is the date the changes were signed into law. The income tax accounting effect of a change in tax laws or tax rates includes, for example, adjusting (or re-measuring) deferred tax liabilities and deferred tax assets, as well as evaluating whether a valuation allowance is needed for deferred tax assets. The Company re-measured its deferred tax liabilities and deferred tax assets as of December 22, 2017 resulting in a decrease to income tax expense of $19.3 million. The Company determined no valuation allowance was needed for any deferred tax assets as a result of the Act.

In December 2017, the Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 118 (SAB 118), which provides guidance regarding how a company is to reflect provisional amounts when necessary information is not yet available, prepared, or analyzed sufficiently to complete its accounting for the effect of the changes in the Tax Act. The income tax benefit of $19.3 million recorded during the year ended December 31, 2017 represents all known and estimable impacts of the Tax Act and is a provisional amount based on the Company’s current best estimate. This provisional amount incorporates assumptions made based upon the Company’s current interpretations of the Tax Act and may change as the Company receives additional clarification and implementation guidance, and as data becomes available allowing for a more accurate scheduling of the deferred tax assets and liabilities, including those related to items potentially impacted by the Tax Act such as accruals in 2017 related to payments not occurring until later in 2018, partnership basis, and tax implications of the Tax Act at state and local jurisdictions. Adjustments to this provisional amount through December 22, 2018 will be included in income from operations as an adjustment to tax expense in future periods.

Schedule of Deferred Tax Assets and Liabilities

The tax effect of temporary differences that give rise to deferred tax assets and liabilities include the following:



	As of December 31,
	2017			2016
Deferred tax assets:
Student loans	$	13,532		20,980
Deferred revenue	3,246			2,699
Securitizations	2,970			5,675
Intangible assets	2,899			4,821
Accrued expenses	2,246			3,533
Stock compensation	1,744			2,948
Total gross deferred tax assets	26,637			40,656
Less valuation allowance	(254		)	(264	)
Net deferred tax assets	26,383			40,392
Deferred tax liabilities:
Basis in certain derivative contracts	23,051			46,636
Partnership basis	21,474			4,976
Loan origination services	8,001			13,019
Depreciation	4,958			5,128
Debt repurchases	3,856			12,457
Debt and equity investments	1,767			3,246
Other	823			360
Total gross deferred tax liabilities	63,930			85,822
Net deferred tax liability	$	(37,547	)	(45,430	)