. Income Taxes

We recognize deferred tax assets and liabilities for future tax consequences attributable to differences between our financial statement carrying amounts of existing assets and liabilities and their respe

ctive tax bases. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. We recognize the effect on deferred tax assets and liabilities resulting from a change in tax rates in income in the period that includes the date of the change.

The

TCJA was signed into law on

December 22, 2017.

The TCJA reduced the value of our deferred tax liabilities resulting in the recognition of a tax benefit of approximately

$146.0

million in the

fourth

quarter of

2017

with a credit to earnings for a reduction of those liabilities. In addition, the TCJA contains significant changes to corporate taxes that will materially affect the taxes owed by us in

2018

and subsequent years. Among other things, the new law reduces the maximum federal corporate income tax rate from

35%

21%,

which should have a positive effect on our net earnings and earnings per share. It also limits or eliminates certain deductions to which we have been entitled in past years.

It also includes an option to claim accelerated depreciation deductions on qualified property but limits or eliminates certain deductions to which we have been entitled in past years

The SEC staff issued

Staff Accounting Bulletin

No.

118

(“SAB

118”

) to address the application of U.S. GAAP in situations when a registrant does

not

have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the TCJA. We have recognized the provisional tax impacts related primarily to depreciation deductions and included these amounts in our consolidated financial statements for the year ended

December 31, 2017.

The ultimate impact

may

differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions we have made, additional regulatory guidance that

may

be issued, and actions we

may

take as a result of the TCJA. The accounting is expected to be complete when the

2017

U.S. corporate income tax return is filed later in

2018

Under certain circumstances, we recognize liabilities in our financial statements for positions taken on uncertain tax issues.

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others

may

be subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, we believe it is more likely than

not

that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are

not

offset or aggregated with other positions. Tax positions that meet the more-likely-than-

not

recognition threshold are measured as the largest amount of tax benefit that is more than

percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits on the balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized tax benefits are classified as income tax expense in the statement of operations.

Federal and state

and local income tax expense (benefit) is summarized as follows (in thousands):

	Year Ended December 31,
	2017			2016			2015
Current:
Federal	$	4,633		$	-		$	-
State and local		3,261			2,730			1,259
State and local - reserve for uncertain tax positions		757			(698	)		(581	)
Current income tax expense (benefit)		8,651			2,032			678
Deferred:
Federal (1)		(81,666	)		38,214			24,067
State and local		4,341			3,172			1,703
Deferred income tax (benefit) expense		(77,325	)		41,386			25,770
Total income tax (benefit) expense	$	(68,674	)	$	43,418		$	26,448

(

)

Includes a federal tax benefit of

$146.0

million from the restatement of deferred taxes resulting from the reduction of the corporate tax rate due to the enactment of the TCJA.

Significant components of our deferred tax liabilities and assets are as follows (in thousands):

	December 31,
	2017			2016
Deferred tax liabilities:
Net book value of property and equipment	$	18,131		$	26,620
Broadcast licenses, goodwill and other intangibles		272,330			369,275
Total deferred tax liabilities		290,461			395,895

Deferred tax assets:
Liability for accrued vacation		1,438			2,232
Liability for accrued bonus		2,391			5,483
Loan acquisition costs		47			336
Allowance for doubtful accounts		1,170			1,168
Liability under health and welfare plan		608			1,201
Liability for pension plan		9,611			13,278
Federal operating loss carryforwards		-			20,401
State and local operating loss carryforwards		4,719			4,555
Alternative minimum tax carryforwards		3,925			386
Unearned income		2			3
Stock options		113			174
Acquisition costs		2,104			3,140
Restricted stock		2,636			1,950
Other		82			109
Total deferred tax assets		28,846			54,416
Valuation allowance for deferred tax assets		(75	)		(1,532	)
Net deferred tax assets		28,771			52,884

Deferred tax liabilities, net of deferred tax assets	$	261,690		$	343,011

We have approximately

$61.6

million in federal operating loss carryforwards from

2016,

which will be fully utilized when we file our

2017

tax return. Additionally, we have an aggregate of approximately

$101.7

million of various state operating loss carryforwards. We project to have taxable income in the carryforward periods. Therefore, we believe that it is more likely than

not

that our state net operating loss carryforwards will be fully utilized.

A valuation allowance has been provided for a portion of the state net operating loss carryforwards. We believe that we will

not

meet the more likely than

not

threshold in certain states due to the uncertainty of generating sufficient income. Therefore, the state valuation allowance at

December 31, 2017

and

2016

was

$0.1

million and

$1.5

million, respectively.

Our total valuation allowance provided for deferred income tax assets decreased $

1.4

million for the year ended

December 31, 2017

due to changes in estimated utilization of state operating loss carryforwards. Our total valuation allowance provided for deferred income tax assets decreased

$0.2

million for the year ended

December 31, 2016

due to changes in estimated utilization of state operating loss carryforwards.

A reconciliation of income tax expense at the statutory federal income tax rate and income taxes as reflected in the consolidated financial statements for the years ended

December 31, 2017,

2016

and

2015

is as follows (in thousands):

	Year Ended December 31,
	2017			2016			2015
Statutory federal rate applied to income before income tax expense	$	67,647		$	36,992		$	23,012
Current year permanent items		2,408			1,830			1,192
State and local taxes, net of federal tax benefit		7,889			5,056			2,831
Change in valuation allowance		(1,457	)		(151	)		(369	)
Reserve for uncertain tax positions		757			(698	)		(581	)
Rate change due to enactment of tax reform		(145,997	)		-			-
Other items, net		79			389			363
Income tax (benfit) expense as recorded	$	(68,674	)	$	43,418		$	26,448

Effective income tax (benefit) expense rate		(35.5)%			41.1%			40.2%

As of each year end, we are required to adjust our pension liability to an amount equal to the funded status of our pension plans with a corresponding adjustment to other comprehensive income on a net of tax basis. During

2017,

we increased our recorded non-current pension liability by

$7.4

million and recognized other comprehensive loss of

$4.5

million, net of a

$2.9

million tax benefit. During

2016,

we increased our recorded non-current pension liability by

$0.6

million and recognized other comprehensive loss of

$0.4

million, net of a

$0.2

million tax benefit. During

2015,

we decreased our recorded non-current pension liability by

$5.8

million and recognized other comprehensive income of

$3.5

million, net of a

$2.3

million tax expense.

2017,

2016

and

2015,

we made income tax payments (net of refunds) of

$2.0

million,

$14.6

million and

$1.8

million, respectively. At

December 31, 2017,

we had current prepaid income taxes of approximately

$13.8

million and at

December 31, 2016,

we had current prepaid income taxes of approximately

$14.6

million.

prescribe a recognition threshold and measurement attribution for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For benefits to be recognized, a tax position must be more likely than

not

to be sustained upon examination by taxing authorities.

We file income tax returns in the U.S. federal and multiple state jurisdictions.

With few exceptions, we are

longer subject to U.S. federal, or state and local tax examinations by tax authorities for years prior to

2007.

This extended open adjustment period is due to material amounts of net operating loss carryforwards, which exist at the federal level and in multiple-state jurisdictions arising from the

2009

and

2011

tax years.