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)	2018		2017			2016
Total (benefit) provision:	$	1,320	$	(1,283	)	$	496
Federal:
Current	862		(1,266		)	(758		)
Deferred	64		255			1,146
	926		(1,011		)	388
State:
Current	353		(120		)	(145		)
Deferred	41		(152		)	253
	394		(272		)	108
	$	1,320	$	(1,283	)	$	496

The provision for income taxes for fiscal year 2017 included 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. During 2018, the Company completed its analysis of the impacts of the U.S. Tax Reform and no additional expense was warranted. Other provisions of the U.S. Tax Reform did not have a material effect on our effective tax rate for 2018.

A reconciliation of the provision for income taxes, with the amount computed by applying the statutory Federal income tax rate of 21% in 2018 and 34% for periods prior to income before provision for income taxes is as follows for the years ended December 31:



($ in thousands)	2018			2017			2016
Income tax at statutory rate	$	1,171		$	(1,046	)	$	440
State income taxes, net of Federal benefit	317			(185		)	66
Oil and mineral depletion	(134		)	(180		)	(161		)
Permanent differences	19			25			82
Excess stock compensation expense	(20		)	107			—
U.S. Tax Reform adjustment	—			54			—
Other	(33		)	(58		)	69
(Benefit) provision for income taxes	$	1,320		$	(1,283	)	$	496
Effective tax rate	23.8		%	41.3		%	39.6		%

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 were as follows at December 31:



($ in thousands)	2018		2017
Deferred income tax assets:
Accrued expenses	$	318	$	393
Deferred revenues	697		209
Capitalization of costs	1,937		2,138
Pension adjustment	2,937		2,996
Stock grant expense	2,674		2,130
State deferred taxes	25		—
Book deferred gains	941		941
Joint venture allocations	1,091		1,025
Provision for additional capitalized costs	699		699
Interest rate swap	—		267
Other	155		423
Total deferred income tax assets	$	11,474	$	11,221
Deferred income tax liabilities:
Deferred gains	$	32	$	32
Depreciation	3,100		3,563
Cost of sales allocations	872		872
Joint venture allocations	4,914		3,972
Straight line rent	611		631
Prepaid expenses	298		132
State deferred taxes	256		322
Interest rate swap	28		—
Other	134		135
Total deferred income tax liabilities	$	10,245	$	9,659
Net deferred income tax asset	$	1,229	$	1,562
Allowance for deferred tax assets	—		—
Net deferred taxes	$	1,229	$	1,562

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 did not make federal and state income tax payments in 2018 and 2017. The Company received refunds of $164,000 and $124,000 in 2018 and 2017, 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, 2018 and 2017 within the scope of ASC 740, "Income Taxes." Tax years from 2015 to 2017 and 2014 to 2017 remain available for examination by the Federal and California State taxing authorities, respectively.