|12 Months Ended|
Dec. 31, 2018
|Income Tax Disclosure [Abstract]|
The following table summarizes our provision for income taxes for the periods presented:
The following table reconciles the difference between the income tax expense (benefit) computed by applying the statutory tax rate to our income (loss) before income taxes and our reported income tax benefit for the periods presented:
The following table summarizes the principal components of our deferred income tax assets and liabilities as of the dates presented:
Analysis of 2018 Tax Reform
On December 22, 2017, the U.S. Congress enacted the budget reconciliation act commonly referred to as the Tax Cuts and Jobs Act (the “TCJA”). The TCJA makes broad and complex changes to the U.S. tax code, including but not limited to, (i) the requirement to pay a one-time transition tax on all undistributed earnings of foreign subsidiaries; (ii) reducing the U.S. federal corporate income tax rate from 35% to 21%; (iii) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (iv) creating a new limitation on deductible interest expense; (v) changing rules related to use and limitations of NOL carryforwards created in tax years beginning after December 31, 2017 and (vi) repeal of the corporate alternative minimum tax (“AMT”).
In connection with our analysis of the impact of the TCJA, we recorded income tax charge of $86.6 million for the year ended December 31, 2017, which consists of a reduction of deferred tax assets previously valued at 35%. We recorded a corresponding decrease in our deferred tax asset valuation allowance representing an income tax benefit for the same amount. The reduction in the statutory U.S. federal rate is expected to positively impact the Company’s future US after tax earnings. As a result of the repeal of the AMT, our existing AMT credit carryovers became refundable beginning with the 2018 tax year. The AMT credit carryforwards are used to offset current year regular tax liabilities with 50 percent of any excess remaining credit per year being refundable as part of the annual income tax filing. We anticipate a full refund of our approximately $5 million of the AMT credit carryforwards by 2021.
Income Tax Provision
The provision for the year ended December 31, 2018 includes a current federal benefit of $2.5 million attributable to the anticipated refund of AMT credits for the 2018 tax year. This amount has been recognized as a “current income tax receivable” on our Consolidated Balance Sheet as of December 31, 2018. This benefit is offset by a corresponding decrease in the deferred tax asset associated with the refundable AMT credit giving rise to a deferred federal expense. In addition, we have a recognized a deferred state tax expense of $0.5 million for an overall effective tax rate of 0.2%. The remaining AMT credit carryforwards of approximately $2.5 million will be reclassified from deferred tax assets, where they are classified as of December 31, 2018, to current income tax receivables upon the filing of federal returns in future years.
In addition to the aforementioned offsetting items with respect to the reduction in income tax rates, our income tax provision for the year ended December 31, 2017 included federal income taxes of $9.7 million applied at the statutory rate of 35% for 2017 and an adjustment of $10.8 million attributable to reductions in certain tax attributes of property and other adjustments of $0.3 million applied in connection with the filing of our 2016 income tax returns. These expenses were effectively offset by benefits attributable to the reduction in our deferred tax asset valuation allowance of $24.4 million and state income tax benefits of $1.4 million resulting in a net tax deferred benefit of $4.9 million. The entire federal tax benefit and the corresponding net deferred tax asset presented on our Consolidated Balance Sheet as of December 31, 2017 are exclusively attributable to the AMT credit carryforwards.
Deferred Tax Assets and Liabilities
As of December 31, 2018, we had federal NOL carryforwards of approximately $557.2 million, a substantial portion of which, if not utilized, expire between 2032 and 2037. NOLs incurred after January 1, 2018 can be carried forward indefinitely. State NOL carryforwards of approximately $437.9 million expire between 2024 and 2037. Because of the change in ownership provisions of the Code, use of a portion of our federal and state NOL may be limited in future periods. As of December 31, 2018, we carried a valuation allowance against our federal and state deferred tax assets of $128.7 million. We considered both the positive and negative evidence in determining whether it was more likely than not that some portion or all of our deferred tax assets will be realized. The amount of deferred tax asset considered realizable could, however, be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth. Our net deferred tax assets recognized on the Consolidated Balance Sheets as of December 31, 2018 and 2017 are attributable to AMT credit carryforwards, and net of certain state deferred tax liabilities as of December 31, 2018. The valuation allowance related to all other net deferred tax assets remains in full.
Other Income Tax Matters
We had no liability for unrecognized tax benefits as of December 31, 2018 and 2017. There were no interest and penalty charges recognized during the years ended December 31, 2018, 2017 and 2016. Tax years from 2013 forward remain open for examination by the Internal Revenue Service and various state jurisdictions, and certain taxes are not dischargeable in bankruptcy.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef