INCOME TAXES:

The components of income tax expense (benefit) were as follows:



	For The Years Ended December 31,
	2018			2017			2016
Current:
U.S. Federal	$	20,634		$	65,856		$	(76,447	)
U.S. State	3,240			2,732			(1,924		)
Non-U.S.	1,436			2,030			1,411
	25,310			70,618			(76,960		)
Deferred:
U.S. Federal	(7,509		)	17,397			89,268
U.S. State	(8,973		)	(787		)	2,257
	(16,482		)	16,610			91,525

Total Income Tax Expense	$	8,828		$	87,228		$	14,565

A reconciliation of income tax expense (benefit) and the amount computed by applying the statutory federal income tax rate of 21% to income from operations before income tax is:



	For the Years Ended December 31,
	2018					2017					2016
	Amount			Percent		Amount			Percent		Amount			Percent
Statutory U.S. federal income tax rate	$	39,399		21.0	%	$	59,429		35.0	%	$	22,755		35.0	%
State income taxes, net of federal tax benefit	3,240			1.7		1,264			0.7		997			1.5
Foreign income taxes	1,436			0.8		—			—		—			—
Excess tax depletion	(20,873		)	(11.1	)	(24,216		)	(14.3	)	(21,856		)	(33.6	)
Effect of domestic production activities	—			—		(6,493		)	(3.8	)	1,621			2.5
Effect of change in U.S. tax law	2,777			1.5		58,558			34.5		—			—
IRS and state tax examination settlements	—			—		—			—		13,958			21.5
Effect of valuation allowance	(1,379		)	(0.7	)	1,379			0.8		—			—
Research and development credit	(980		)	(0.5	)	—			—		—			—
Non-controlling interest	(5,420		)	(2.9	)	—			—		—			—
State rate change and prior period adjustments	(8,223		)	(4.4	)	—			—		—			—
Other	(1,149		)	(0.6	)	(2,693		)	(1.6	)	(2,910		)	(4.5	)
Income Tax Expense / Effective Rate	$	8,828		4.8	%	$	87,228		51.3	%	$	14,565		22.4	%

Significant components of deferred tax assets and liabilities were as follows:



	December 31,
	2018			2017
Deferred Tax Asset:
Postretirement benefits other than pensions	$	108,603		$	131,354
Asset retirement obligations	57,956			51,415
Pneumoconiosis benefits	41,632			36,160
Workers' compensation	16,016			16,778
Salary retirement	15,855			12,465
Mine subsidence	15,097			15,322
Financing	9,387			—
State bonus, net of Federal	6,042			4,473
Long-term disability	2,798			3,375
Other	6,669			7,924
Total Deferred Tax Asset	280,055			279,266
Valuation Allowance	—			(1,379		)
Net Deferred Tax Asset	280,055			277,887

Deferred Tax Liability:
Property, plant and equipment	(175,558		)	(174,806		)
Equity Partnerships	(16,638		)	(17,991		)
Advance mining royalties	(10,314		)	(10,025		)
Total Deferred Tax Liability	(202,510		)	(202,822		)

Net Deferred Tax Asset	$	77,545		$	75,065

As required by U.S. GAAP, a valuation allowance is required when it is more likely than not that all or a portion of a deferred tax asset will not be realized. Management must review all available evidence, both positive and negative, in determining the need for a valuation allowance. For the years ended December 31, 2018 and 2017, positive evidence considered included pretax cumulative income over the past three years, utilization of previous period net operating losses, financial forecasts of future earnings, reversals of financial to tax temporary differences, and the implementation of and/or ability to employ various tax planning strategies. Negative evidence included the tax loss generated in the prior year and the ability to fully utilize certain tax assets as a result of enactment of Public Law 115-97, commonly known as the Tax Cuts and Jobs Act. Management assessed both the federal and deferred state tax attributes for all subsidiaries during the period. After considering all available evidence, both positive and negative, management determined that no valuation allowance is necessary at this time.

On December 22, 2017, the President of the United States signed Public Law 115-97 “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018,” commonly referred to as the Tax Cuts and Jobs Act (“Tax Bill”). Under U.S. GAAP, the effects of new legislation are recognized upon enactment, which, for federal legislation, is the date the President signs a bill into law. Accordingly, recognition of the tax effects of the Tax Bill is required in the interim and annual periods that include December 22, 2017. The SEC also released Staff Accounting Bulletin 118 on December 22, 2017. This bulletin clarifies certain aspects of ASC 740 and provides a three-step process for applying ASC 740. First, a company must reflect in its financial statements the income tax effects of the Tax Bill on items for which the company can make a complete assessment. Next, a measurement period not to exceed one year is provided for a company to report provisional amounts of the income tax effects of the Tax Bill for items for which the company’s assessment is incomplete, but for which it can make a reasonable estimate. A company may adjust provisional amounts as it obtains additional information in subsequent reporting periods. Finally, for items for which a company cannot make a reasonable estimate, a company is not required to report provisional amounts and will continue to apply ASC 740 based on tax law existing immediately before December 22, 2017. A company is required to report provisional amounts for these items in the first reporting period in which the company is able to make a reasonable estimate of the income tax effects of the Tax Bill.

The Company has evaluated the impact of the Tax Bill and has recorded the following provisional impacts in its financial statements. On December 22, 2017, the Company incurred tax expense of $58,558 because of the federal corporate income tax rate being reduced from 35% to 21% for all periods after December 31, 2017. During the current tax year, the Company has completed its review of the applicable provisions of the Tax Bill and has recognized an additional expense of $2,777 during the measurement period, primarily related to return to provision adjustments.

The Company utilizes the “more likely than not” standard in recognizing a tax benefit in its financial statements. For the years ended December 31, 2018 and 2017, the Company did not have any unrecognized tax benefits. If accrual for interest or penalties is required, it is the Company’s policy to include these as a component of income tax expense.

The Company is subject to taxation in the United States, as well as various states, and Canada, as well as various provinces. Under the provisions of the tax matters agreement entered into between the Company and its former parent on November 28, 2017, certain subsidiaries of the Company are subject to examination for tax years for the period January 1, 2015 through December 31, 2018 for certain state and foreign returns. Further, the Company is subject to examination for the period November 28, 2017 through December 31, 2018 for federal and certain state returns.