Income Taxes

12 Months Ended

Dec. 31, 2018

The components of our income tax (provision) benefit were as follows for the periods indicated (in thousands):


	Year Ended December 31,
	2018		2017		2016
Current:
Federal	$	388	$	(1,418)	$	(2,103)
State	39		523		(675)
Total current	427		(895)		(2,778)
Deferred:
Federal	(752)		3,722		777
State	(184)		118		80
Total deferred	(936)		3,840		857
Total (provision for) benefit from income taxes⁽¹⁾	$	(509)	$	2,945	$	(1,921)

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(1) 2016 includes a tax benefit of $0.8 million related to losses from our investment in Bencap, and is included in the loss from investment in unconsolidated affiliate category on the consolidated statements of operations.

A reconciliation of the (provision for) benefit from income taxes with amounts determined by applying the statutory U.S. federal income tax rate to income before income taxes was as follows for the periods indicated (in thousands):


	Year Ended December 31,
	2018		2017		2016

Pre-tax net book income (loss) ⁽¹⁾	$	3,454	$	(3,427)	$	4,434

Statutory federal income tax (provision) benefit	$	(725)	$	1,165	$	(1,552)
State income tax (provision) benefit	(145)		736		(387)
Federal statutory depletion	—		153		62
Federal tax rate adjustment	—		2,007		—
Valuation allowance	—		(1,038)		—
Reverse valuation allowance	98		—		—
Return to provision adjustments	388		—		—
Other	(125)		(78)		(44)
Total (provision for) benefit from income taxes	$	(509)	$	2,945	$	(1,921)
Effective income tax rate ⁽²⁾⁽³⁾	15%		86%		43%

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(1) 2016 includes the pre-tax loss from investment in unconsolidated affiliate of $2.2 million.

(2) Excluding the adjustment related to the federal tax rate change, the effective income tax rate for 2017 is 58 percent.

(3) Excluding the adjustment related to the return to provision, the effective income tax rate for 2018 is 26 percent.

Deferred income taxes reflect the net difference between the financial statement carrying amounts and the underlying income tax basis in these items. The components of the federal deferred tax asset (liability) were as follows at the dates indicated (in thousands):


	December 31,
	2018		2017

Long-term deferred tax asset (liability): ⁽¹⁾
Prepaid and other insurance	$	(170)	$	(684)
Property	(5,259)		(2,497)
Investments in unconsolidated affiliates	525		623
Valuation allowance related to investments in unconsolidated affiliates	(525)		(623)
Net operating loss	1,436		—
Other	(245)		(121)
Net long-term deferred tax liability	(4,238)		(3,302)
Net deferred tax liability	$	(4,238)	$	(3,302)

______________

(1) Amounts as of December 31, 2017 have been revalued at 21 percent as a result of the enactment of the Tax Cuts and Jobs Act on December 22, 2017.

Financial statement recognition and measurement of positions taken, or expected to be taken, by an entity in its income tax returns must consider the uncertainty and judgment involved in the determination and filing of income taxes. Tax positions taken in an income tax return that are recognized in the financial statements must satisfy a more-likely-than-not recognition threshold, assuming that the tax position will be examined by taxing authorities with full knowledge of all relevant information. We have no significant unrecognized tax benefits. Interest and penalties associated with income tax liabilities are classified as income tax expense.

The earliest tax years remaining open for audit for federal and major states of operations are as follows:


			Earliest Open
			Tax Year

Federal			2014
Texas			2014
Louisiana			2015
Michigan			2014

Other Matters

The Tax Cuts and Jobs Act (the “Act”) was signed into law on December 22, 2017. The Act changed many aspects of U.S. corporate income taxation and included a reduction of the corporate income tax rate from 35 percent to 21 percent, implementation of a territorial tax system and imposition of a tax on deemed repatriated earnings of foreign subsidiaries. We recognized the tax effects of the Act in the year ended December 31, 2017 and recorded a $2.0 million tax benefit, which relates entirely to the remeasurement of deferred tax liabilities to the 21 percent tax rate.