(12) Income Taxes

For the years ended December 31, 2016, 2017, and 2018, income tax expense (benefit) consisted of the following (in thousands):


	Year ended December 31,
	2016		2017		2018
Current income tax expense (benefit)	$	(10,984)		75		—
Deferred income tax benefit		(485,392)		(295,126)		(128,857)
Total income tax benefit	$	(496,376)		(295,051)		(128,857)

Income tax expense (benefit) differs from the amount that would be computed by applying the U.S. statutory federal income tax rate of 35% for the years ended December 31, 2016 and 2017, and 21% for the year ended December 31, 2018, to income or loss before taxes as a result of the following (in thousands):


	Year ended December 31,
	2016		2017		2018
Federal income tax expense (benefit)	$	(436,038)		171,530		(36,657)
State income tax expense (benefit), net of federal benefit		(20,364)		10,779		(12,627)
Change in Federal tax rate, net of state benefit (1)		—		(427,962)		—
Change in State tax rate, net of federal effect		—		—		(40,415)
Nondeductible equity-based compensation		3,691		12,098		6,079
Noncontrolling interest in Antero Midstream		(34,780)		(59,523)		(73,881)
Change in valuation allowance		(10,852)		(2,073)		28,116
Other		1,967		100		528
Total income tax benefit	$	(496,376)		(295,051)		(128,857)

⁽¹⁾

The change in the Federal tax rate was due to the passage of Public Law No. 115-97, commonly referred to as the Tax Cuts and Jobs Act. The passage of this legislation resulted in the Company generating a deferred tax benefit in 2017 primarily due to the reduction in the U.S. statutory rate from 35% to 21%.

Deferred income taxes reflect the impact of temporary differences between assets and liabilities for financial reporting purposes and such amounts as measured by tax laws. The tax effect of the temporary differences giving rise to net deferred tax assets and liabilities at December 31, 2017 and 2018 is as follows (in thousands):


	2017		2018
Deferred tax assets:
Net operating loss carryforwards	$	727,522		734,255
Equity-based compensation		12,062		10,633
Investment in Antero Midstream		38,613		—
Other		11,236		15,726
Total deferred tax assets		789,433		760,614
Valuation allowance		(17,361)		(45,477)
Net deferred tax assets		772,072		715,137
Deferred tax liabilities:
Unrealized gains on derivative instruments		442,855		271,747
Oil and gas properties		1,058,543		1,055,850
Investment in Antero Midstream		—		11,258
Other		50,319		27,070
Total deferred tax liabilities		1,551,717		1,365,925
Net deferred tax liabilities	$	(779,645)		(650,788)

In assessing the realizability of deferred tax assets, management considers whether some portion or all of the deferred tax assets will be realized based on a more-likely-than-not standard of judgment. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the Company’s temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the projections of future taxable income over the periods in which the deferred tax assets are deductible, management believes that the Company will not realize the benefits of certain of these deductible differences and has recorded a valuation allowance of approximately $17 million and $45 million at December 31, 2017 and 2018, respectively related to state net operating loss (“NOL”) carryforwards. The increase in the valuation allowance from $17 million at December 31, 2017 to $45 million at December 31, 2018, is due to an additional allowance provided for Colorado NOLs because of a change in Colorado apportionment regulations. The amount of the deferred tax asset considered realizable could be further reduced in the near term if estimates of future taxable income during the carryforward period are revised.

The calculation of the Company’s tax liabilities involves uncertainties in the application of complex tax laws and regulations. The Company gives financial statement recognition to those tax positions that it believes are more‑likely-than‑not to be sustained upon examination by the Internal Revenue Service or state revenue authorities. In 2016, the Company reversed unrecognized benefits recorded in prior years due to the expiration of the applicable statutes of limitations. The removal of the unrecognized benefits did not impact the Company’s 2016 effective tax rate. The Company will continue to monitor potential uncertain tax positions, but does not anticipate any changes within the next year. The Company had an $11 million unrecognized tax benefit at the beginning of the year ended December 31, 2016, which was reduced in the year ended December 31, 2016, and has no other balances through December 31, 2018.

As of December 31, 2018, the Company has U.S. federal and state NOL carryforwards of $3.0 billion and $2.3 billion, respectively, which expire at various dates from 2019 to 2038.

Tax years 2015 through 2018 remain open to examination by the U.S. Internal Revenue Service. The Company and its subsidiaries file tax returns with various state taxing authorities and those returns remain open to examination for tax years 2014 through 2018.