INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of Income Tax Expense (Benefit)

Income tax (benefit) expense consists of the following:



	Year Ended December 31,
	2018			2017			2016
Current:
Federal	$	6,146		$	(1,250	)	$	3,813
State and Local	477			360			252
Total Current Income Tax Expense (Benefit)	6,623			(890		)	4,065
Deferred:
Federal	(68,907		)	148,997			33,999
State and Local	(11,147		)	19,521			847
Total Deferred Income Tax Expense (Benefit)	(80,054		)	168,518			34,846
Total Income Tax (Benefit) Expense	$	(73,431	)	$	167,628		$	38,911

Schedule of Reported Provision for Income Taxes and the U.S. Federal Statutory Rate

The difference between New Residential’s reported provision for income taxes and the U.S. federal statutory rate of 21% is as follows:



	December 31,
	2018		2017		2016
Provision at the statutory rate	21.00	%	35.00	%	35.00	%
Non-taxable REIT income	(25.44	)%	(21.72	)%	(28.22	)%
State and local taxes	(1.19	)%	1.76	%	0.18	%
Change in valuation allowance	(2.31	)%	0.85	%	0.67	%
Change in federal tax rate	—	%	(0.92	)%	—	%
Other	(0.30	)%	(0.17	)%	(0.48	)%
Total provision	(8.24	)%	14.80	%	7.15	%

Schedule of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liability are presented below:



	December 31,
	2018			2017
Deferred tax assets:
Net operating losses and tax credit carryforwards^(B)	$	41,713		$	20,682
Interest accruals not currently deductible for tax purposes	—			2,628
Basis differences for REO and other assets	8,453			8,034
Unrealized mark to market	36,758			—
Other	3,087			2,279
Total deferred tax assets	90,011			33,623
Less valuation allowance	—			(12,404		)
Net deferred tax assets	$	90,011		$	21,219

Deferred tax liabilities:
Basis difference for partnership and other investments	$	(24,179	)	$	(3,873	)
Interest accruals not currently includible in income for tax purposes	—			(6,979		)
Unrealized mark to market	—			(29,585		)
Total deferred tax (liability)	$	(24,179	)	$	(40,437	)

Net deferred tax assets (liability)	$	65,832		$	(19,218	)

(A)

As of December 31, 2018, New Residential’s TRSs had approximately $131.3 million of net operating loss carryforwards for federal and state income tax purposes which may be available to offset future taxable income, if and when it arises. Approximately, $131.3 million of these federal and state net operating loss carryforwards will begin to expire in 2034. The utilization of the net operating loss carryforwards to reduce future income taxes will depend on the TRSs ability to generate sufficient taxable income prior to the expiration of the carryforward period.

Summary of Changes in Deferred Tax Asset Valuation Allowance

The following table summarizes the change in the deferred tax asset valuation allowance:



Valuation allowance at December 31, 2016	$	10,054
Increase related to net operating losses and loan loss reserves	4,720
Decrease related to changes in tax rates	(3,845		)
Other increase (decrease)	1,475
Valuation allowance at December 31, 2017	12,404
Increase related to net operating losses and loan loss reserves	18,769
Decrease related to changes in tax rates	—
Other increase (decrease)	(31,173		)
Valuation allowance at December 31, 2018	$	—

Schedule of Taxable Common Stock Distributions

Common stock distributions were taxable as follows:



Year	Dividends per Share		Ordinary Income		Long-term Capital Gain		Return of Capital
2018^(A)	$	1.60	78.03	%	1.03	%	20.94	%
2017^(B)	1.94		66.64	%	7.83	%	25.53	%
2016	1.38		96.13	%	3.87	%	—	%


(A)	The entire $0.50 per share dividend declared in December 2018 and paid in January 2019 is treated as received by stockholders in 2019.


(B)	The entire $0.50 per share dividend declared in December 2017 and paid in January 2018 is treated as received by stockholders in 2018.