(6) INCOME TAXES

Income tax expense (benefit) was as follows (dollars in thousands):

		Three Months Ended March 31,
		2017			2016
Income tax expense (benefit)	$	112,395		$	(41,976	)
Effective tax rate		39.8	%		30.9	%

We compute our quarterly taxes under the effective tax rate method based on applying an anticipated annual effective rate to our year-to-date income, except for discrete items. Income taxes for discrete items are computed and recorded in the period that the specific transaction occurs. For first quarter 2017 and 2016, our overall effective tax rate was different than the federal statutory rate of 35% due primarily to state income taxesand other tax items which are detailed below (dollars in thousands).

	Three Months Ended March 31,
		2017			2016
Total income (loss) before income taxes	$	282,506		$	(135,748	)
U.S. federal statutory rate		35	%		35	%
Total tax expense (benefit) at statutory rate		98,877			(47,512	)

State and local income taxes, net of federal benefit		8,982			(4,432	)
Non-deductible executive compensation		140			236
Tax less than book equity compensation		2,524			5,266
Change in valuation allowances:
Federal net operating loss carryforwards & other		856			—
State net operating loss carryforwards & other		2,086			4,490
Rabbi trust		(1,122	)		(51	)
Permanent differences and other		52			27
Total expense (benefit) for income taxes	$	112,395		$	(41,976	)
Effective tax rate		39.8	%		30.9	%