Quarterly report pursuant to Section 13 or 15(d)

INCOME TAXES

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INCOME TAXES
6 Months Ended
Jun. 30, 2018
Income Tax Disclosure [Abstract]  
INCOME TAXES
INCOME TAXES
 
Income tax expense (benefit) consists of the following:
 
 
Three Months Ended 
 June 30,

Six Months Ended  
 June 30,
 
 
2018

2017

2018

2017
Current:
 
 
 
 
 
 
 
 
Federal
 
$
(1,100
)
 
$
503

 
$
608

 
$
2,611

State and Local
 
251

 
153

 
687

 
223

Total Current Income Tax Expense (Benefit)
 
(849
)
 
656

 
1,295

 
2,834

Deferred:
 
 
 
 
 
 
 
 
Federal
 
(2,955
)
 
73,330

 
(11,628
)
 
76,076

State and Local
 
1,196

 
8,858

 
813

 
9,530

Total Deferred Income Tax Expense (Benefit)
 
(1,759
)
 
82,188

 
(10,815
)
 
85,606

Total Income Tax Expense (Benefit)
 
$
(2,608
)
 
$
82,844

 
$
(9,520
)
 
$
88,440


 
New Residential intends to qualify as a REIT for each of its tax years through December 31, 2018. A REIT is generally not subject to U.S. federal corporate income tax on that portion of its income that is distributed to stockholders if it distributes at least 90% of its REIT taxable income to its stockholders by prescribed dates and complies with various other requirements.
 
New Residential operates various securitization vehicles and has made certain investments, particularly its investments in MSRs (Note 5), Servicer Advance Investments (Note 6) and REO (Note 8), through taxable REIT subsidiaries (“TRSs”) that are subject to regular corporate income taxes which have been provided for in the provision for income taxes, as applicable.

New Residential has recorded a net deferred tax liability of approximately $8.4 million as of June 30, 2018, primarily related to unrealized gains and discount accruals offset by net operating loss carry forwards.

On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) was signed into law. The TCJA includes a number of significant changes to existing U.S. corporate income tax laws, most notably a reduction of the U.S. corporate income tax rate from 35 percent to 21 percent, effective January 1, 2018. New Residential measures deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid. New Residential is still analyzing certain aspects of the TCJA and refining its calculations, which could potentially affect the measurement of these balances or give rise to new deferred tax amounts.