Income Taxes

The components of the provision for income taxes are as follows:



	Years Ended December 31,
($ in thousands)	2018		2017		2016
Current
Federal	$	18,864	$	15,670	$	12,790
State	3,668		1,985		1,855
Total current tax expense (benefit)	22,532		17,655		14,645
Deferred
Federal	5,901		20,895		5,489
State	4,528		1,940		910
Total deferred tax expense (benefit)	10,429		22,835		6,399
Total expense (benefit) for income taxes	$	32,961	$	40,490	$	21,044

The following presents a reconciliation of the provision (benefit) for income taxes computed at the federal statutory rate to the provision (benefit) for income taxes recognized in the Consolidated Statements of Operations for the years indicated:



	Years Ended December 31,
($ in thousands)	2018					2017					2016
Tax at statutory rate	$	22,899		21	%	$	28,150		35	%	$	24,432		35	%
State taxes, net of federal benefit	6,450			6		3,548			4		2,010			3
Effect of U.S. tax reform (the Tax Act)	—			—		13,074			16		—			—
Effect of net income (loss) attributable to noncontrolling interests	(171		)	—		(1,017		)	(1	)	(91		)	—
Change in valuation allowance	4,508			4		(2,613		)	(3	)	(5,125		)	(7	)
Other, net	(725		)	(1	)	(652		)	(1	)	(182		)	(1	)
Income tax expense (benefit)	$	32,961		30	%	$	40,490		50	%	$	21,044		30	%

The provision for income taxes reflects U.S. federal, state and local taxes at an effective tax rate of 30%, 50% and 30% for the years ended December 31, 2018, 2017 and 2016, respectively. The Company's tax position for the years ended December 31, 2018, 2017 and 2016 was impacted by changes in the valuation allowance related to the unrealized and realized gains and losses on the Company’s investments.

On December 22, 2017, the Tax Cuts and Jobs Act (the Tax Act) was enacted which made significant changes to federal income tax law, including reducing the statutory corporate income tax rate to 21 percent from 35 percent. The SEC issued Staff Accounting Bulletin No. 118, which specifies, among other things, that reasonable estimates of the income tax effects of the Tax Act should be used, if determinable. The accounting for these elements of the 2017 Tax Act is complete.

Deferred taxes resulted from temporary differences between the amounts reported in the consolidated financial statements and the tax basis of assets and liabilities. The tax effects of temporary differences are as follows:



	December 31,
($ in thousands)	2018			2017
Deferred tax assets:
Intangible assets	$	7,352		$	10,706
Net operating losses	14,750			16,769
Compensation accruals	11,728			7,681
Investments	7,557			7,322
Capital losses	512			870
Other	942			1,675
Gross deferred tax assets	42,841			45,023
Valuation allowance	(8,439		)	(3,088		)
Gross deferred tax assets after valuation allowance	34,402			41,935
Deferred tax liabilities:
Intangible assets	(12,286		)	(9,507		)
Gross deferred tax liabilities	(12,286		)	(9,507		)
Deferred tax assets, net	$	22,116		$	32,428

At each reporting date, the Company evaluates the positive and negative evidence used to determine the likelihood of realization of its deferred tax assets. The Company maintained a valuation allowance in the amount of $8.4 million and $3.1 million at December 31, 2018 and 2017, respectively, relating to deferred tax assets on items of a capital nature as well as certain state deferred tax assets.

As of December 31, 2018, the Company had net operating loss carry-forwards for federal income tax purposes represented by an $8.5 million deferred tax asset. The related federal net operating loss carry-forwards are scheduled to begin to expire in the year 2031. As of December 31, 2018, the Company had state net operating loss carry-forwards, varying by subsidiary and jurisdiction, represented by a $6.3 million deferred tax asset. The state net operating loss carry-forwards are scheduled to begin to expire in 2019.

Internal Revenue Code Section 382 limits tax deductions for net operating losses, capital losses and net unrealized built-in losses after there is a substantial change in ownership in a corporation’s stock involving a 50 percentage point increase in ownership by 5% or larger stockholders. During the year ended December 31, 2009, the Company incurred an ownership change as defined in Section 382. At December 31, 2018, the Company has pre-change losses represented by deferred tax assets totaling $11.6 million. The utilization of these assets is subject to an annual limitation of $1.1 million.

The Company has had no unrecognized tax benefits activity for the years ended December 31, 2018, 2017 and 2016. The Company’s practice is to classify interest and penalties related to income tax matters in income tax expense. The Company recorded no interest or penalties related to unrecognized tax benefits at December 31, 2018, 2017 and 2016.

The earliest federal tax year that remains open for examination is 2015. The earliest open years in the Company’s major state tax jurisdictions are 2010 for Connecticut and 2015 for all of the Company's remaining state tax jurisdictions.