Income Taxes

Significant components of the provision for income taxes from continuing operations are as follows:



	Year Ended December 31,
	2016		2015		2014
	(in thousands)
Current:
Federal	$	60,079	$	21,632	$	85,966
State and local	6,322		6,702		5,389
Foreign	2,034		1,235		2,057
Total current expense	68,435		29,569		93,412
Deferred:
Federal	82,455		149,583		34,240
State and local	3,691		6,031		(122		)
Total deferred expense (benefit)	86,146		155,614		34,118
Total income tax expense (benefit)	$	154,581	$	185,183	$	127,530

The income tax provision differs from that computed at the federal statutory corporate tax rate as follows:



	Year Ended December 31,
	2016		2015		2014
Expected provision at federal statutory tax rate	35.0	%	35.0	%	35.0	%
State tax expense, net of federal benefit	1.6	%	1.7	%	1.0	%
Income tax credits	—	%	—	%	(0.4	)%
Other	0.3	%	0.2	%	0.5	%
Total income tax expense (benefit)	36.9	%	36.9	%	36.1	%

The Company accounts for income taxes using the asset and liability method. Deferred taxes are recorded based on differences between the financial statement basis and tax basis of assets and liabilities and available tax loss and credit carryforwards. At December 31, 2016 and 2015, the significant components of the Company's deferred taxes consisted of the following:



	December 31,
	2016			2015
	(in thousands)
Deferred tax assets:
Deferred revenue	3,057			3,381
Nondeductible accruals	20,547			11,056
Deferred manufacturing credits	910			822
Accrued maintenance	1,854			830
Equity compensation	3,882			4,485
Other	4,026			2,751
Deferred tax assets	34,276			23,325
Deferred tax liabilities:
Capitalized interest	—			286
Deferred gain (loss) on leases, net	2,435			2,393
Accrued rent	14,025			6,724
Prepaid expenses	1,217			2,151
Property, plant and equipment	278,872			168,813
Deferred financing costs	5,358			—
Accrued aircraft and engine maintenance	40,512			64,439
Deferred tax liabilities	342,419			244,806
Net deferred tax assets (liabilities)	$	(308,143	)	$	(221,481	)

In assessing the realizability of the deferred tax assets, management considered whether it is more likely than not that some or all of the deferred tax assets would be realized. In evaluating the Company’s ability to utilize its deferred tax assets, it considered all available evidence, both positive and negative, in determining future taxable income on a jurisdiction by jurisdiction basis. Management does not believe that the realization of deferred tax assets is in jeopardy and thus a valuation allowance for 2016 has not been recorded. Management will continue to monitor the status of Spirit’s operations and reassess the need for a valuation allowance on a quarterly basis.

In accordance with ASC 718, excess tax benefits are only recognized in the financial statements upon actual realization of the related tax benefit. The Company recognized a tax deficiency of $0.5 million and an excess tax benefit of $8.9 million for tax years ended December 31, 2016 and 2015, respectively. The excess tax benefit/(deficiency) was recorded as a reduction/(increase) to income tax payable and a corresponding entry to additional paid in capital.

In December 2015, bonus depreciation was extended with the passage of the Protecting Americans from Tax Hikes Act (the Act). The Company made estimated payments during 2015 excluding the impact of a potential extension of bonus depreciation. The passage of the Act allowed the Company to claim bonus depreciation deductions in 2015 on all bonus eligible acquisitions, including purchased aircraft. These deductions resulted in an overpayment of current year federal income taxes of $72.3 million as of December 31, 2015 which is recorded as a component of current assets on the balance sheet.

The Company's policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of selling, general and administrative expenses. For tax years ended December 31, 2016, 2015 and 2014, the Company did not recognize any liabilities for uncertain tax positions nor any interest and penalties on unrecognized tax benefits.

For tax years 2016, 2015 and 2014, the entire income before income taxes for the Company is subject to domestic income taxes.

The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. The Company's federal income tax returns for 2013 through 2015 tax years are still subject to examination in the U.S. Various state and foreign jurisdiction tax years remain open to examination. The Company believes that any potential assessment would be immaterial to its financial statements.