INCOME TAXES

We have elected to be taxed as a REIT. As a REIT, we are generally not subject to corporate level income taxes on taxable income we distribute to our shareholders. We believe we have met the annual REIT distribution requirement by distribution of at least 90% of our taxable income to our shareholders.

Income related to our TRS is subject to federal, state and local taxes at applicable tax rates. Our consolidated tax provision includes the income tax provision related to the operations of the TRS as well as state and local income taxes related to the Operating Partnership.

The components of income tax expense (benefit) for the years ended December 31, 2017, 2016, and 2015 are as follows (in thousands):



	2017		2016			2015
Current:
Federal	$	10	$	37		$	81
State and local	777		904			408
Deferred:
Federal	232		(1,918		)	(159		)
State and local	49		(473		)	223
Effect of federal tax law change	606		—			—
Income tax expense (benefit)	$	1,674	$	(1,450	)	$	553

As of December 31, 2017, the Company has remeasured its net deferred tax assets as a result of the TCJA resulting in a $0.6 million discrete, non-cash tax expense recorded in the fourth quarter of 2017. The provisional remeasurement amount may change as data becomes available allowing more accurate scheduling of the deferred tax assets and liabilities.

We are still in the process of evaluating the income tax effect of other changes required by the TCJA that will be effective for our fiscal year 2018.

Below is a reconciliation between the provision for income taxes and the amounts computed by applying the federal statutory income tax rate to the income or loss before taxes:



	2017			2016			2015
Statutory federal income tax provision	$	35,418		$	37,384		$	44,033
Nontaxable income of the REIT	(35,073		)	(38,575		)	(41,619		)
Impact of graduated corporate tax rates	(10		)	34			(69		)
State income taxes, net of federal tax benefit	716			548			817
Provision to return and deferred adjustment	—			(872		)	—
Effect of permanent differences and other	17			31			(161		)
Effect of federal tax law change	606			—			—
Decrease in valuation allowance	—			—			(2,448		)
Income tax provision (benefit)	$	1,674		$	(1,450	)	$	553

Deferred tax assets and liabilities are included within Other Assets in the accompanying Consolidated Balance Sheets.

Significant components of deferred tax assets (liabilities) are as follows (in thousands):



	2017			2016
Tax carryforwards	$	449		$	767
Accrued expenses	1,144			1,744
Other	23			(8		)
Net deferred tax assets	$	1,616		$	2,503

Gross deferred tax assets	$	1,649		$	2,580
Gross deferred tax liabilities	(33		)	(77		)
Net deferred tax assets	$	1,616		$	2,503

At December 31, 2017, we had (i) U.S. federal net operating losses of $0.4 million which expire in 2033 (ii) state net operating losses of $1.8 million which expire beginning in 2027 and (iii) federal minimum tax credits of $0.3 million which do not expire.

We had no unrecognized tax benefits at December 31, 2017 or in the three year period then ended. The Company recognizes interest expense and penalties associated with uncertain tax positions as a component of income tax expense. We have no material interest or penalties relating to unrecognized tax benefits in the Consolidated Statements of Operations for the years ended December 31, 2017, 2016 or 2015 or in the Consolidated Balance Sheets as of December 31, 2017 or 2016.

We file U.S. and state income tax returns in jurisdictions with varying statutes of limitations. We currently have no open audits related to our income tax returns. In general, we are not subject to tax examinations by tax authorities for years before 2014.