8.	Income Tax

Income tax expense for the years ended

December 31, 2018,

2017,

and

2016

is summarized below (in thousands):

	For the Years Ended December 31,
	201 8		201 7			201 6
Federal income taxes
Current	$	1,036	$	1,201		$	1,176
Deferred		898		(9,332	)		1,872
Total federal tax expense (benefit)		1,934		(8,131	)		3,048
State income taxes
Current		503		284			308
Deferred		308		(9	)		302
Total state tax expense		811		275			610
Total income tax expense (benefit)	$	2,745	$	(7,856	)	$	3,658

Public Law

No:

115

97,

also known as the Tax Act, was enacted on

December 22, 2017.

The Tax Act reduced the U.S. federal corporate tax rate from

35%

to a flat rate of

21%.

ASC

740

requires deferred tax assets and liabilities to be remeasured as of the date the Tax Act was enacted based on the rates at which they are expected to reverse in the future, which is generally now

21%.

The Securities and Exchange Commission staff issued SAB

118,

which provides guidance on accounting for the impact of the Tax Act and states a reasonable estimate of the Tax Act’s effects on the Company’s deferred tax balances should be included in the Company’s consolidated financial statements. Based on the Company’s understanding of the Tax Act, it made a reasonable estimate of the Tax Act’s effects on the Company’s deferred tax balances. As of

December 31, 2017,

the provisional amount recorded related to the remeasurement of the Company’s deferred tax liability balance was

$9.3

million and reflected a

one

-time reduction in the Company’s income tax provision. As of December

31,

2017,

the Company finalized its accounting estimates for income tax effects related to the Tax Act. The Company has elected to

not

utilize the measurement window provided under SAB

118.

As of December

31,

2018,

the Company did

not

record any adjustments to its

2017

income tax effects resulting from the Tax Act.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of

December 31, 2018,

and

2017,

are presented below (in thousands):

	December 31,
	201 8			20 1 7
Deferred tax liabilities:
Amortization	$	(10,947	)	$	(11,058	)
Depreciation		(9,701	)		(8,408	)
Prepaid expense		(357	)		(151	)
State net operating loss carryforwards and adjustments		(277	)		(266	)
Other		(8	)		(8	)
Total deferred tax liabilities	$	(21,290	)	$	(19,891	)

Deferred tax assets:
Deferred compensation	$	142		$	131
Advance payments		612			520
Bad debt		145			71
Other		246			230
Total deferred tax assets	$	1,145		$	952

As of

December 31, 2018,

the Company had U.S. federal and state net operating loss carryforwards of

and

$43

thousand, respectively. As of

December 31, 2017,

the Company had U.S. federal and state net operating loss carryforwards of

and

$33

thousand, respectively. The Company had

alternative minimum tax credit carryforwards as of

December 31, 2018,

December 31, 2017.

The Company establishes valuation allowances when necessary to reduce deferred tax assets to amounts expected to be realized. As of

December 31, 2018,

the Company had

valuation allowance recorded.

The effective income tax rates as of

December 31, 2018,

2017,

and

2016,

were

22.5%,

(

184.5

)% and

41.5%,

respectively.

ASC

740

prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For each year ended

December 31, 2018,

2017,

and

2016,

the Company did

not

identify any material uncertain tax positions. Tax years from

2015

forward remain open for audit.

Total income tax expense was different than that computed by applying U.S. federal income tax rates to income before income taxes for the years ended

December 31, 2018,

2017,

and

2016.

The reasons for the differences are presented below (in thousands, except percentages):

	For the Years Ended December 31,
	20 1 8			201 7			201 6
Federal income tax at statutory rate		21	%		35	%		35	%

Federal income tax provision at statutory rate	$	2,565		$	1,491		$	3,081
State income tax provision, net of federal income tax effects		641			177			397
Federal tax rate change		-			(9,336	)		-
Adjustments for prior years		(293	)
Other		(168	)		(188	)		180
Provision (benefit) for income taxes	$	2,745		$	(7,856	)	$	3,658
Effective income tax rate		22.5	%		(184.5	%)		41.5	%