INCOME TAXES:

The provision (benefit) for income taxes consisted of the following for the years ended December 31, 2017, 2016, and 2015 (in thousands):



	2017			2016			2015
Current provision for income taxes:
Federal	$	77,477		$	113,737		$	80,420
State	6,625			2,273			5,720
	84,102			116,010			86,140
Deferred (benefit) provision for income taxes:
Federal	(196,468		)	8,555			(26,637		)
State	37,006			(2,437		)	(1,809		)
	(159,462		)	6,118			(28,446		)
(Benefit) provision for income taxes	$	(75,360	)	$	122,128		$	57,694

The following is a reconciliation of federal income taxes at the applicable statutory rate to the recorded provision:



	2017		2016		2015
Federal statutory rate	35.0	%	35.0	%	35.0	%
Adjustments:
Federal tax reform (a)	(54.3	)%	—	%	—	%
State income taxes, net of federal tax benefit (b)	5.0	%	0.2	%	0.6	%
Non-deductible items	1.5	%	1.0	%	1.2	%
Domestic production activities deduction	(1.7	)%	(3.4	)%	(3.9	)%
Changes in unrecognized tax benefits (c)	0.5	%	0.3	%	(1.9	)%
Basis in stock of subsidiaries (d)	—	%	—	%	(5.5	)%
Federal tax credits (e)	(2.2	)%	(0.4	)%	(1.1	)%
Other	1.1	%	0.6	%	0.8	%
Effective income tax rate	(15.1	)%	33.3	%	25.2	%


(a)	Our 2017 income tax provision includes a non-recurring benefit of $272.1 million to reflect the estimated effect of the U.S. Tax Cuts and Jobs Act (Tax Reform) enacted on December 22, 2017.


(b)	Included in state income taxes are deferred income tax effects related to certain acquisitions and/or intercompany mergers.

(c)

During the years ended December 31, 2017, 2016, and 2015, we recorded a $0.1 million, $1.0 million, and $5.7 million, respectively, benefit related to the release of liabilities for unrecognized tax benefits as a result of expiration of the applicable statute of limitations and settlements with taxing authorities. See table below which summarizes the activity related to our accrued unrecognized tax benefits.


(d)	During the year ended December 31, 2015, we recorded a $12.6 million benefit related to the realization of a capital loss upon the sale of the stock of a subsidiary.

(e)

During the year ended December 31, 2017, we recorded a benefit of $8.3 million related to investments in sustainability initiatives whose activities qualify for federal income tax credits. During the years ended December 31, 2017, 2016, and 2015 we recorded a $2.5 million, $1.6 million and $1.1 million, respectively, benefit related to federal income tax credits associated with research and development activities.

Temporary differences between the financial reporting carrying amounts and the tax bases of assets and liabilities give rise to deferred taxes. Total deferred tax assets and deferred tax liabilities as of December 31, 2017 and 2016 were as follows (in thousands):



	2017			2016
Deferred Tax Assets:
Net operating and capital losses:
Federal	$	34,861		$	68,455
State	75,754			63,630
Goodwill and intangible assets	14,389			28,879
Other	33,462			44,873
	158,466			205,837
Valuation allowance for deferred tax assets	(62,865		)	(51,846		)
Total deferred tax assets	$	95,601		$	153,991
Deferred Tax Liabilities:
Goodwill and intangible assets	$	(514,776	)	$	(650,139	)
Property & equipment, net	(80,630		)	(80,950		)
Other	(15,431		)	(32,219		)
Total deferred tax liabilities	(610,837		)	(763,308		)
Net deferred tax liabilities	$	(515,236	)	$	(609,317	)

Our remaining federal and state capital and net operating losses will expire during various years from 2018 to 2037, and some of them are subject to annual limitations under the Internal Revenue Code Section 382 and similar state provisions. As discussed in Income taxes under Note 1. Nature of Operations and Summary of Significant Accounting Policies, we establish valuation allowances in accordance with the guidance related to accounting for income taxes. As of December 31, 2017, a valuation allowance has been provided for deferred tax assets related to a substantial portion of our available state net operating loss carryforwards based on past operating results, expected timing of the reversals of existing temporary book/tax basis differences, alternative tax strategies and projected future taxable income. Although realization is not assured for the remaining deferred tax assets, we believe it is more likely than not that they will be realized in the future. During the year ended December 31, 2017, we increased our valuation allowance by $11.1 million to $62.9 million. The increase in valuation allowance was primarily due to the impact of Tax Reform on the federal tax effect on certain state net operating loss carryforwards, for which a full valuation allowance is provided. During the year ended December 31, 2016, we decreased our valuation allowance by $6.5 million to $51.8 million. The reduction in valuation allowance was primarily due to changes in estimates of apportionment and a tax rate reduction in certain states. During the year ended December 31, 2015, we decreased our valuation allowance by $0.6 million to $58.3 million. The reduction in valuation allowance was primarily due to changes in estimates of apportionment in certain states.

The following table summarizes the activity related to our accrued unrecognized tax benefits (in thousands):



	2017			2016			2015
Balance at January 1,	$	4,739		$	3,257		$	7,138
Additions related to prior year tax positions	2,019			420			1,458
Additions related to current year tax positions	610			2,053			472
Reductions related to settlements with taxing authorities	(131		)	—			(1,517		)
Reductions related to expiration of the applicable statute of limitations	—			(991		)	(4,294		)
Balance at December 31,	$	7,237		$	4,739		$	3,257

We are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. Our 2013 through 2015 federal tax returns are currently under audit, and several of our subsidiaries are currently under state examinations for various years. Our 2014 and subsequent federal and state tax returns remain subject to examination by various tax authorities. Some of our pre-2014 federal and state tax returns may also be subject to examination. We do not anticipate the resolution of these matters will result in a material change to our consolidated financial statements. In addition, we believe it is reasonably possible that our liability for unrecognized tax benefits related to continuing operations could be reduced by up to $2.0 million, in the next twelve months, as a result of expected statute of limitations expirations, the application of limits under available state administrative practice exceptions, and the resolution of examination issues and settlements with federal and certain state tax authorities.