Amplify Energy is a corporation and as a result, is subject to U.S. federal, state and local income taxes.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The provisions of the Tax Act that impact us include, but are not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) elimination of the corporate alternative minimum tax (AMT); (3) temporary bonus depreciation that will allow for full expensing of qualified property, and (4) limitations on net operating losses (NOLs) generated after December 31, 2017, to 80% of taxable income.

			Successor					Predecessor
	For the		For the		Period from			Period from
	Year Ended		Year Ended		May 5, 2017			January 1, 2017
	December 31,		December 31,		through			through
	2019		2018		December 31, 2017			May 4, 2017
	(In thousands)							(In thousands)
Current taxes:
Federal	$	—	$	—	$	4		$	—
State		50		—		(34	)		17
Total current income tax benefit (expense)		50		—		(30	)		17
Deferred taxes:
Federal		—		—		1,933			71
State		—		—		273			3
Total deferred income tax benefit (expense)		—		—		2,206			74
Total income tax benefit (expense)	$	50	$	—	$	2,176		$	91

The actual income tax benefit (expense) differs from the expected amount computed by applying the federal statutory corporate tax rate of 21% in 2019, 21% in 2018 and 35% in 2017 as follows:

				Successor						Predecessor
	For the			For the			Period from			Period from
	Year Ended			Year Ended			May 5, 2017			January 1, 2017
	December 31,			December 31,			through			through
	2019			2018			December 31, 2017			May 4, 2017
	(In thousands)									(In thousands)
Expected tax benefit (expense) at federal statutory rate	$	7,402		$	11,468		$	310		$	5,764
State income tax benefit (expense), net of federal benefit		946			1,108			240			30
Non-deductible expenses		(3,659	)		1,328			(187	)		—
Changes in valuation allowances		(4,332	)		(14,194	)		24,767			—
Remeasurement of federal deferred tax assets due rate change		—			—			(22,958	)		—
Pass-through entities (1)		—			—			—			(5,686	)
Non-cash compensation		(367	)		—			—			—
Other		60			290			4			(17	)
Total income tax benefit (expense)	$	50		$	—		$	2,176		$	91

(1)	MEMP, a publicly traded partnership with qualifying income, was a pass-through entity for federal income tax purposes.

The Company’s deferred tax position reflects the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting. Significant components of the deferred tax assets and liabilities are as follows (in thousands):

	December 31,			December 31,
	2019			2018
Deferred income tax assets:
Property, Plant & Equipment	$	37,075		$	2,208
Net operating loss carryforward		141,534			19,085
Disallowed interest expense		10,627			5,748
Accrued liabilities		1,431			1,387
Other		4,234			307
Total deferred income tax assets:		194,901			28,735
Valuation allowance		(189,941	)		(23,934	)
Net deferred income tax assets		4,960			4,801

Deferred income tax liabilities:
Derivatives	$	2,767		$	4,801
Other		2,193			—
Total deferred income tax liabilities		4,960			4,801

Net deferred income tax liabilities	$	—		$	—

As of December 31, 2019, the Company had approximately $618.0 million of federal net operating loss carryovers of which $590.6 million have no expiration date and the remaining will expire in year 2037. As of December 31, 2019, the Company had approximately $238.5 million of state net operating loss carryovers of which $203.9 million have no expiration period and the remaining will expire in varying amounts beginning in 2037.

In assessing deferred tax assets, the Company considers whether a valuation allowance should be recorded for some or all of the deferred tax assets which may not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. Among other items, the Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income and available tax planning strategies. A valuation allowance is established against deferred tax assets for which management believes realization is considered to be more likely than not that all of the deferred tax assets will not be realized. As of December 31, 2019, a valuation allowance of $189.9 million had been recorded which is an increase to the valuation allowance of $166.0 million from the prior year.

Uncertain Income Tax Position. We must recognize the tax effects of any uncertain tax positions we may adopt, if the position taken by us is more likely than not sustainable based on its technical merits. For those benefits to be recognized, an income tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. We had no unrecognized tax benefits as of December 31, 2019.

Tax Audits and Settlements. Currently, the Internal Revenue Service (IRS) is auditing our 2017 tax year; however, there have been no proposed adjustments or resolutions communicated to the Company. Our income tax years 2018 and 2019 remain open and subject to examination by the IRS. For state and local jurisdictions, our 2017 through 2019 tax years remain open and subject to examination where we conduct operations. In certain jurisdictions we operate through more than one legal entity, each of which may have different open years subject to examination.