10. Income Tax

We recorded a tax expense of approximately $1 million, for the year ended December 31, 2017 and $0 million for the years ended December 31 2016 and 2015, related to the activities of our TRS. The federal income tax expense and benefits recorded were determined using a rate of 35% in each tax year. In measuring our deferred tax assets and liabilities we used the newly enacted federal rate established through the TCJA of 21%. Below is a reconciliation between the statutory rates as of December 31, 2017 and our effective tax rates for the years ended December 31:

We recorded a deferred tax liability of $1 million and $0 million as of December 31, 2017 and 2016, respectively, related to the activities of our TRS. Our deferred tax liability is included in accounts payable, accrued expenses and other on our consolidated balance sheet. Deferred income taxes represent the tax effect from continuing operations of the differences between the book and tax basis of assets and liabilities. As a result of the enactment of the TCJA, we measured our deferred tax assets and liabilities as of December 31, 2017, using the new federal 21% corporate rate and our applicable state rates. Deferred tax assets (liabilities) include the following as of December 31:

We have unused NOLs of $115 million and tax credits of approximately $10 million that will begin to expire in 2034. If our TRS entities were to experience a change in control as defined in Section 382 of the Internal Revenue Code, the TRS’s ability to utilize NOL in the years after the change in control would be limited. Similar rules and limitation may apply for state tax purposes as well.

We have no examinations in progress, none are expected at this time, and years 2013 through 2016 are open. As of December 2017 and 2016, we had no uncertain tax positions. Our policy is to recognize interest expense and penalties related to income tax matters as a component of general and administrative expense. There were no accrued interest and penalties as of December 31, 2017 and 2016, and no interest and penalties were recognized during the years ended December 31, 2017, 2016, or 2015.

For federal income tax purposes, the cash dividends paid for the years ended December 31, 2017 and 2016 are characterized as follows:

U.S. Federal Income Tax Legislation

The TCJA, which was signed into law on December 22, 2017, made significant changes to the U.S. federal income tax laws applicable to businesses and their owners, including REITs and their stockholders. Certain key provisions of the TCJA could impact us and our stockholders, beginning in 2018, including the following:

In relation to the above amendments, the income and cash allocations received from our equity method investments in renewable energy projects are determined in part based on certain tax assumptions. As a result, certain of our partners’ allocations in these projects may be affected by the changes that may impact our income allocations determined under the HLBV method. Therefore, we consider allocations from these equity method investments to be provisional. Additionally, we have included a provision in our consolidated financial statements to estimate the impact of the TCJA, specifically including the impact of the change in rates on our deferred tax assets and liabilities. We continue to evaluate the impact of the TCJA and will finalize our assessment in 2018.