Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Income Taxes.

Schedule of components of the Company's income tax expense

The components of the Company’s income tax expense from operations for the year ended December 31, consisted of (in thousands):

	2018		2017		2016
Current:
Federal	$	13,828	$	19,496	$	845
State		5,598		4,448		1,297
Deferred:
Federal		11,970		97,792		3,571
State		(606)		33,174		87
Income tax expense	$	30,790	$	154,910	$	5,800

Schedule of reconciliation of income tax expense from operations to the federal statutory rate

A reconciliation of income tax expense from operations to the federal statutory rate for the year ended December 31, is as follows (in thousands):

	2018		2017		2016
Income taxes computed at federal statutory rate(1)	$	20,238	$	134,961	$	72,259
State income taxes – net of federal benefit(1)		4,313		13,570		7,253
Other differences:
Federal alternative minimum tax and state and local taxes on pass-through entities		1,076		1,072		1,013
Income taxes computed at the effective federal and state statutory rate for pass-through entities not subject to tax for the Company (2)		(41,367)		(84,747)		(75,774)
Increase in valuation allowance		43,175		11,194		1,049
Impact of 2017 Tax Act (3)		—		78,222		—
Impact of other state tax rate changes		(2,020)		—		—
Goodwill impairment		6,158		—		—
Other		(783)		638		—
Income tax expense	$	30,790	$	154,910	$	5,800

⁽¹⁾ Federal and state tax for 2018 and 2017 include the tax effect of $0.3 million of income tax expense and $38.8 million of income tax benefit, respectively, relating to the reduction in the Tax Receivable Agreement liability.

⁽²⁾ The related income is taxable to the noncontrolling interest for periods after the Company’s IPO and taxable to the holders of membership units prior to the Company’s IPO.

⁽³⁾ Excludes the tax effect of $0.3 million of income tax expense and $38.8 million of income tax benefit for 2018 and 2017, respectively, relating to the reduction in the Tax Receivable Agreement liability, which is included in federal and state tax.

Summary of significant items comprising the net deferred tax asset

Significant items comprising the net deferred tax assets at December 31, were (in thousands):

	2018		2017
Deferred tax liabilities
Accelerated depreciation	$	(6,468)	$	(5,147)
Prepaid expenses		(1,238)		(302)
Intangible assets		(3,474)		(3,501)
Other		—		(305)
		(11,180)		(9,255)
Deferred tax assets
Investment impairment		21,974		21,647
Inventory related		6,479		170
Gift cards		1,478		744
Deferred revenues		322		304
Accrual for employee benefits and severance		1,401		1,221
Stock option expense		440		218
Investment in partnership		208,749		208,559
Tax Receivable Agreement liability		34,184		35,319
AMT credit		—		609
Net operating loss carryforward		51,654		17,518
Claims reserves		126		440
Intangible assets		547		113
Goodwill		3,836		996
Deferred book gain		770		851
Other reserves		6,146		5,697
		338,106		294,406
Valuation allowance		(180,983)		(132,468)
Net deferred tax assets	$	145,943	$	152,683