INCOME TAXES

As a REIT, the Company is generally not subject to federal income tax with respect to that portion of its income which is distributed annually to its stockholders. However, the Company has elected to treat one of its corporate subsidiaries, Extra Space Management, Inc., as a taxable REIT subsidiary. In general, the Company’s TRS may perform additional services for tenants and generally may engage in any real estate or non-real estate related business. A TRS is subject to corporate federal income tax. The Company accounts for income taxes in accordance with the provisions of ASC 740, “Income Taxes.” Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities. The Company has elected to use the Tax-Law-Ordering approach to determine when excess tax benefits will be realized.

The income tax provision for the years ended December 31, 2016, 2015 and 2014, is comprised of the following components:



	For the Year Ended December 31, 2016
	Federal			State			Total
Current expense	$	14,627		$	2,368		$	16,995
Tax credits/true-up	(312		)	—			(312		)
Change in deferred benefit	(369		)	(467		)	(836		)
Total tax expense	$	13,946		$	1,901		$	15,847



	For the Year Ended December 31, 2015
	Federal		State			Total
Current expense	$	3,736	$	1,640		$	5,376
Tax credits/true-up	274		—			274
Change in deferred benefit	7,016		(1,518		)	5,498
Total tax expense	$	11,026	$	122		$	11,148



	For the Year Ended December 31, 2014
	Federal			State		Total
Current expense	$	6,020		$	1,374	$	7,394
Tax credits/true-up	(2,176		)	—		(2,176		)
Change in deferred benefit	803			1,549		2,352
Total tax expense	$	4,647		$	2,923	$	7,570

A reconciliation of the statutory income tax provisions to the effective income tax provisions for the periods indicated is as follows:



	For the Year Ended December 31,
	2016					2015					2014
Expected tax at statutory rate	$	144,708		35.0	%	$	77,151		35.0	%	$	71,215		35.0	%
Non-taxable REIT income	(131,112		)	(31.7	)%	(67,084		)	(30.4	)%	(64,402		)	(31.7	)%
State and local tax expense - net of federal benefit	2,399			0.6	%	1,249			0.6	%	1,109			0.6	%
Change in valuation allowance	(845		)	(0.2	)%	(624		)	(0.3	)%	1,663			0.8	%
Tax credits/true-up	(312		)	(0.1	)%	274			0.1	%	(2,176		)	(1.1	)%
Miscellaneous	1,009			0.2	%	182			0.1	%	161			0.1	%
Total provision	$	15,847		3.8	%	$	11,148		5.1	%	$	7,570		3.7	%

The major sources of temporary differences stated at their deferred tax effects are as follows:



	December 31, 2016			December 31, 2015
Deferred tax liabilities:
Fixed assets	$	(16,488	)	$	(17,360	)
Other	(201		)	(221		)
State deferred taxes	(1,242		)	(1,523		)
Total deferred tax liabilities	(17,931		)	(19,104		)

Deferred tax assets:
Captive insurance subsidiary	413			429
Accrued liabilities	2,741			2,633
Stock compensation	1,713			1,346
Solar credit	—			2,167
Other	1,548			309
SmartStop TRS	365			1,085
State deferred taxes	6,078			6,016
Total deferred tax assets	12,858			13,985

Valuation allowance	(4,765		)	(5,609		)

Net deferred income tax liabilities	$	(9,838	)	$	(10,728	)

The state income tax net operating losses expire between 2017 and 2034. The valuation allowance is associated with the state income tax net operating losses. The tax years 2012 through 2015 remain open related to the state returns, and 2013 through 2015 for the federal returns.