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, 2018, 2017, and 2016 are as follows (in thousands):



	2018			2017		2016
Current:
Federal	$	(67	)	$	10	$	37
State and local	(425		)	777		904
Deferred:
Federal	(279		)	232		(1,918		)
State and local	(151		)	49		(473		)
Effect of federal tax law change	—			606		—
Income tax (benefit) expense	$	(922	)	$	1,674	$	(1,450	)

As of December 31, 2017, the Company 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. At September 30, 2018, we had completed our accounting for all the enactment-date income tax effects of the act under ASC 740, Income Taxes. No subsequent adjustments have been necessary.

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:



	2018			2017			2016
Statutory federal income tax provision	$	18,943		$	35,418		$	37,384
Nontaxable income of the REIT	(19,073		)	(35,073		)	(38,575		)
Effect of graduated corporate tax rates	—			(10		)	34
State income taxes, net of federal tax benefit	266			716			548
Provision to return and deferred adjustment	75			—			(872		)
Effect of permanent differences and other	(184		)	17			31
Tax benefit from deduction for partnership distributions	(949		)	—			—
Effect of federal tax law change	—			606			—
Income tax (benefit) provision	$	(922	)	$	1,674		$	(1,450	)

In 2018, we amended certain prior year Operating Partnership state returns to claim a deduction for distributions made by the Operating Partnership to Summit Hotel Properties, Inc. which resulted in a tax benefit of $0.9 million.

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):



	2018			2017
Tax carryforwards	$	154		$	449
Accrued expenses	1,893			1,144
Other	(1		)	23
Net deferred tax assets	$	2,046		$	1,616

Gross deferred tax assets	$	2,086		$	1,649
Gross deferred tax liabilities	(40		)	(33		)
Net deferred tax assets	$	2,046		$	1,616

At December 31, 2018, we had (i) state net operating losses of $1.5 million which expire beginning in 2027 and (ii) federal minimum tax credits of $0.1 million which do not expire.

We had no unrecognized tax benefits at December 31, 2018 or in the three year period then ended. We expect no significant increase or decrease in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2018. We have no material interest or penalties relating to unrecognized tax benefits in the Consolidated Statements of Operations for the years ended December 31, 2018, 2017 or 2016 or in the Consolidated Balance Sheets as of December 31, 2018 or 2017.

We file U.S. and state income tax returns in jurisdictions with varying statutes of limitations. In general, we are not subject to tax examinations by tax authorities for years before 2014.