|12 Months Ended|
Dec. 31, 2016
|Income Tax Disclosure [Abstract]|
For financial reporting purposes, income (loss) before income taxes and equity earnings for the years ended December 31, 2016, 2015 and 2014 were as follows (in thousands):
The components of income tax expense (benefit) for the years ended December 31, 2016, 2015 and 2014 were as follows (in thousands):
The following table reconciles the difference between the statutory federal income tax rate for the Company and the effective income tax rate for the years ended December 31, 2016, 2015 and 2014:
The components of net deferred income tax liabilities as of December 31, 2016 and 2015 were as follows (in thousands):
As of December 31, 2016 and 2015, the Company had federal net operating loss (“NOL”) carryforwards of $4.6 million and $0, respectively, state income tax NOL carryforwards of $355.2 million and $125.2 million, respectively, in various states and $40.9 million and $34.2 million, respectively, in foreign jurisdictions. The Company also had foreign tax credits in the amount of $0.6 million and $0 as of December 31, 2016 and 2015, respectively. The state NOL carryforwards will expire from 2024 to 2036, and the foreign NOL carryforwards have unlimited carryforward periods. Federal NOL carryforwards will expire in 2036. The foreign tax credits will expire in 2026.
After considering all available evidence in assessing the need for the valuation allowance, the Company believes that it is more likely than not the benefit from foreign and some state deferred tax assets will not be realized. As of December 31, 2016, the Company has provided a valuation allowance of $8.0 million on the state deferred tax assets. The Company has provided a valuation allowance of $13.6 million with respect to the foreign deferred tax assets, included in the table above, made up of $13.1 million related to Aeróleo and $0.5 million related to Sicher. If the assumptions change and the Company determines it will be able to realize those deferred tax assets, the tax benefits relating to any reversal of the valuation allowance on deferred tax assets would be recorded in the income tax provision in the period in which such adjustments are identified.
The Company’s operations are subject to the jurisdiction of multiple tax authorities, which impose various types of taxes on it including income taxes. Determining taxes owed in any jurisdiction requires the interpretation of relevant tax laws, regulations, judicial decisions and administrative interpretation of the local tax authority. As a result, the Company is subject to tax assessments in such jurisdictions including the re-determination of taxable amounts by tax authorities that may not agree with the Company’s interpretations and positions taken.
The effects of a tax position are recognized in the period in which it is determined that it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. We remain subject to examination for U.S. federal and major state tax jurisdictions for tax years after 2013 and in Brazil for 2012 and subsequent years.
Pursuant to a new shareholders’ agreement entered into on October 1, 2015 with the Company’s new partner in Aeróleo (see Note 4), the Company is the primary beneficiary, and Aeróleo is now a consolidated entity. The Company has analyzed filing positions of Aeróleo in Brazil where it is required to file income tax returns for all open tax years (2012 to 2016).
A reconciliation of the beginning and ending amount of the gross unrecognized tax benefits, excluding interest and penalties, is as follows (in thousands):
Amounts accrued for interest and penalties associated with unrecognized income tax benefits are included in other expense on the Consolidated Statements of Operations. As of December 31, 2016, the gross amount of liability for accrued interest and penalties related to unrecognized tax benefits was $0.2 million. While amounts could change in the next twelve months, the Company does not anticipate it having a material impact on its financial statements.
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://www.xbrl.org/2003/role/presentationRef