NYCB 2017 Annual Report

115 The following table summarizes the Company’s income tax expense (benefit) for the years ended December 31, 2017, 2016, and 2015: December 31, (in thousands) 2017 2016 2015 Federal – current $153,587 $216,182 $(53,273) State and local – current 26,983 20,799 (295) Total current 180,570 236,981 (53,568) Federal – deferred 3,498 18,203 468 State and local – deferred 17,946 26,543 (31,757) Total deferred 21,444 44,746 (31,289) Income tax expense (benefit) reported in net income 202,014 281,727 $(84,857) Income tax expense (benefit) reported in stockholders’ equity related to: Employee stock plans -- -- (2,486) Securities available-for-sale 28,495 (2,687) 131 Pension liability adjustments 2,234 2,924 (1,161) Non-credit portion of OTTI losses 13 49 44 Total income taxes $232,756 $282,013 $(88,329) The following table presents a reconciliation of statutory federal income tax expense (benefit) to combined actual income tax expense (benefit) reported in net income for the years ended December 31, 2017, 2016, and 2015: December 31, (in thousands) 2017 2016 2015 Statutory federal income tax at 35% $233,875 $271,995 $(46,204) State and local income taxes, net of federal income tax effect (1) 29,204 30,772 (20,835) Effect of tax law changes (41,943) -- -- Effect of tax deductibility of ESOP (5,083) (6,452) (7,321) Non-taxable income and expense of BOLI (9,529) (10,808) (9,575) Federal tax credits (1,386) (1,607) (1,554) Adjustments relating to prior tax years 144 (668) (248) Merger-related expenses -- (850) 850 Other, net (3,268) (655) 30 Total income tax expense (benefit) $202,014 $281,727 $(84,857) (1) Includes income tax (benefit) expense for the years ended December 31, 2015 of $(1.4) million for adjustments to deferred taxes necessitated by changes in tax laws of New York City that were enacted in April 2015. On December 22, 2017 H.R. 1, originally known as the Tax Cuts and Jobs Act, (the “Tax Reform Act”) was enacted. The Tax Reform Act significantly revised the U.S. corporate income tax regime by, among other things: • Lowering of the U.S. corporate tax rate from 35% to 21% effective January 1, 2018. • Repeal of corporate alternative minimum tax (AMT) for tax years beginning after December 31, 2017. • Reduction of the corporate dividends received deduction of 80% and 70% to 65% and 50%, respectively, for tax years beginning after December 31, 2017. • Disallowance of the deduction for FDIC premiums for banks with total consolidated assets over $50 billion effective tax years beginning after December 31, 2017. • Allows for full expensing of qualified property acquired or placed in service between September 27, 2017 and January 1, 2023. • Limitation of net operating loss (NOL) carryforwards to 80% of taxable income for losses arising in tax years beginning after December 31, 2017 and prohibiting NOL carrybacks for losses arising in tax years beginning after December 31, 2017 and providing an unlimited life for NOL carryforwards. U.S. GAAP requires that the impact of tax legislation be recognized in the period in which the law was enacted. As a result of the Tax Reform Act, the Company recorded a tax benefit of $42 million due to the net impact of remeasurement of tax attributes affected by the enactment of the Tax Reform Act.