INCOME TAXES

The Company intends to continue to operate so as to qualify, for United States federal income tax purposes, as a partnership, and not as an association or publicly traded partnership taxable as a corporation. As such, the Company generally is not subject to United States federal income tax at the entity level, but is subject to limited state and foreign taxes.

The Company owns both REIT and domestic taxable corporate subsidiaries. The Company’s REIT subsidiaries are not expected to incur federal tax expense, but are subject to limited state income tax expense related to the 2016 tax year. The domestic taxable corporate subsidiaries taxed as regular corporations under the Code are expected to incur federal and state tax expense related to the 2016 tax year. The income tax expense (benefit) consisted of the following components (amounts in thousands):



	Successor Company							Predecessor Company
	Year ended December 31, 2016		Year ended December 31, 2015		Eight months ended December 31, 2014			Four months ended April 30, 2014
Current:
Federal income tax	$	114	$	48	$	(63	)	$	(4,304	)
State income tax	52		134		126			137
Total	166		182		63			(4,167		)
Deferred:
Federal income tax	1,012		843		343			4,329
State income tax	211		165		78			—
Total	1,223		1,008		421			4,329
Total income tax expense (benefit)	$	1,389	$	1,190	$	484		$	162

The tax provision for domestic taxable corporate subsidiaries taxed as regular corporations was based on a combined federal and state income tax rate of 39.44% at December 31, 2016, 39.16% at December 31, 2015 and 39.81% at December 31, 2014. The tax rate is equivalent to the combined federal statutory income tax rate and the state statutory income tax rate, net of federal benefit.

The following table presents a reconciliation of income before taxes at the statutory rate to the effective tax expense (benefit) (amounts in thousands):



	Successor Company									Predecessor Company
	Year ended December 31, 2016			Year ended December 31, 2015			Eight months ended December 31, 2014			Four months ended April 30, 2014
Income before taxes at statutory rate	$	7,969		$	(116,720	)	$	(76,561	)	$	37,150
Income passed through to shareholders	(4,694		)	128,242			83,098			(34,377		)
REIT income not subject to tax	(2,171		)	(10,574		)	(6,072		)	(2,773		)
State and local income taxes, net of federal benefit	171			194			82			88
Withholding taxes	114			48			21			25
Other	—			—			(84		)	49
Effective tax expense (benefit)	$	1,389		$	1,190		$	484		$	162

Deferred tax assets are recognized if, in management’s judgment, their realizability is determined to be more likely than not. If a deferred tax asset is determined to be unrealizable, a valuation allowance is established. The significant components of deferred tax assets and liabilities are reflected in the following table as of December 31, 2016 and 2015 (amounts in thousands):



	As of December 31, 2016			As of December 31, 2015
Deferred tax assets:
Unrealized losses from investments in domestic corporate subsidiaries	$	—		$	—
Total deferred tax assets	—			—
Deferred tax liabilities:
Unrealized gains from investments in domestic corporate subsidiaries	2,653			1,008
Total deferred tax liabilities	2,653			1,008
Net deferred tax assets (liabilities)	$	(2,653	)	$	(1,008	)