INCOME TAXES

The Company accounts for income taxes using ASC 740, “Income Taxes” which is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized differently in the financial statements and the tax returns. The provision for income taxes consists of the following at December 31:



($ in thousands)	2017			2016			2015
Total (benefit) provision:	$	(1,123	)	$	336		$	1,125
Federal:
Current	(1,266		)	(758		)	1,521
Deferred	380			1,021			(682		)
	(886		)	263			839
State:
Current	(120		)	(145		)	585
Deferred	(117		)	218			(299		)
	(237		)	73			286
	$	(1,123	)	$	336		$	1,125

The provision for income taxes for fiscal year 2017 includes a $54,000 estimated tax expense as a result of the revaluation of federal net deferred tax assets from 34% to 21% due to the impact of the enactment of U.S. Tax Reform. The final impact of U.S. Tax Reform may differ from these estimates, due to, among other things, changes in interpretations, analysis and assumptions made by management, additional guidance that may be issued by the U.S. Department of the Treasury and the Internal Revenue Service, and any updates or changes to estimates we have utilized to calculate the transition impact. Therefore, our accounting for the elements of U.S. Tax Reform is incomplete. However, we were able to make reasonable estimates of the effects of U.S. Tax Reform on a provisional basis.

A reconciliation of the provision for income taxes, with the amount computed by applying the statutory Federal income tax rate of 34% to income before provision for income taxes is as follows for the years ended December 31:



($ in thousands)	2017			2016			2015
Income tax at statutory rate	$	(910	)	$	304		$	1,360
State income taxes, net of Federal benefit	(161		)	42			213
Oil and mineral depletion	(180		)	(161		)	(213		)
Permanent differences	25			82			(92		)
Excess stock compensation expense	107			—			—
Tax Reform adjustment	54			—			—
Other	(58		)	69			(143		)
(Benefit) provision for income taxes	$	(1,123	)	$	336		$	1,125
Effective tax rate	42.0		%	37.6		%	28.1		%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows at December 31:



($ in thousands)	2017		2016
Deferred income tax assets:
Accrued expenses	$	393	$	561
Deferred revenues	209		654
Capitalization of costs	2,138		3,224
Pension adjustment	2,996		4,690
Stock grant expense	2,130		2,309
State deferred taxes	—		37
Book deferred gains	941		1,912
Joint venture allocations	1,025		932
Provision for additional capitalized costs	699		1,003
Interest rate swap	267		799
Other	423		41
Total deferred income tax assets	$	11,221	$	16,162
Deferred income tax liabilities:
Deferred gains	$	32	$	51
Depreciation	3,563		5,279
Cost of sales allocations	872		1,252
Joint venture allocations	3,972		5,389
Straight line rent	631		926
Prepaid expenses	132		323
State deferred taxes	322		470
Other	135		190
Total deferred income tax liabilities	$	9,659	$	13,880
Net deferred income tax asset	$	1,562	$	2,282
Allowance for deferred tax assets	—		—
Net deferred taxes	$	1,562	$	2,282

Due to the nature of our deferred tax assets, the Company believes they will be used through operations in future years and a valuation allowance is not necessary.

The Company made total federal and state income tax payments of $0 in 2017 and $1,750,000 during 2016. The Company received refunds of $124,000 and $615,000 in 2017 and 2016, respectively.

The Company evaluates its tax positions for all income tax items based on their technical merits to determine whether each position satisfies the “more likely than not to be sustained upon examination” test. The tax benefits are then measured as the largest amount of benefit, determined on a cumulative basis, that is “more likely than not” to be realized upon ultimate settlement. As a result of this evaluation, the Company determined there were no uncertain tax positions that required recognition and measurement for the years ended December 31, 2017 and 2016 within the scope of ASC 740, "Income Taxes." Tax years from 2014 to 2016 and 2013 to 2016 remain available for examination by the Federal and California State taxing authorities, respectively.