|12 Months Ended|
Mar. 31, 2021
|Income Tax Disclosure [Abstract]|
The components of deferred tax assets and liabilities are as follows (in thousands):
Companies may use foreign tax credits to offset the U.S. income taxes due on income earned from foreign sources. However, the credit that may be claimed for a particular taxable year is limited by the total income tax on the U.S. income tax return as well as by the ratio of foreign source net income in each statutory category to total net income. The amount of creditable foreign taxes available for the taxable year that exceeds the limitation (i.e., “excess foreign tax credits”) may be carried back one year and forward ten years. The Company had $33.6 million of excess foreign tax credits as of March 31, 2021 (Successor), of which, $4.0 million will expire in fiscal year 2022, $0.2 million will expire in fiscal year 2023, $15.6 million will expire in fiscal year 2024, $13.2 million will expire in fiscal year 2025 and $0.6 million will expire in fiscal year 2030. As
of March 31, 2021 (Successor), the Company had $61.7 million of net operating losses in the U.S., of which $0.5 million will expire in fiscal year 2038 and the balance carried forward indefinitely. In addition, the Company has net operating losses in certain states totaling $540.6 million which will begin to expire in fiscal year 2022.
Certain limitations on the deductibility of interest expense pursuant to the Tax Cuts and Jobs Act (the “Act”) became effective on April 1, 2018. As of March 31, 2021 (Successor) the Company had $178.8 million gross disallowed U.S. interest expense carryforward. As March 31, 2020 (Predecessor) Old Bristow had $146.7 million gross disallowed U.S. interest expense carryforward. The disallowed interest expense can be carried forward indefinitely. As of March 31, 2021 (Successor), a valuation allowance had been recorded for a portion of the deferred tax asset related to interest expense limitations.
The realization of deferred income tax assets is dependent upon the generation of sufficient taxable income during future periods in which the temporary differences are expected to reverse. The valuation allowance is reviewed on a quarterly basis and if the assessment of the “more likely than not” criteria changes, the valuation allowance is adjusted accordingly. The valuation allowance continues to be applied against certain deferred income tax assets where the Company has assessed that the realization of such assets does not meet the “more likely than not” criteria. As of March 31, 2021 (Successor), valuation allowances were $91.7 million for foreign operating loss carryforwards, $39.3 million for state operating loss carryforwards, $11.3 million for interest expense limitation carryforwards and $33.6 million for foreign tax credits.
The following table is a rollforward of the valuation allowance against the Company’s deferred tax assets (in thousands):
The components of loss before benefit (provision) for income taxes are as follows (in thousands):
The provision (benefit) for income taxes consisted of the following (in thousands):
The reconciliation of the U.S. Federal statutory tax rate to the effective income tax rate for the (provision) benefit for income taxes is shown below:
During the fiscal year March 31, 2021 (Successor), the Company’s effective tax rate was 0.6%. The Company’s effective income tax rate for the fiscal year March 31, 2021 (Successor) fluctuated primarily due to the Company’s impairment of foreign investments that do not generate an income tax benefit; adjustment to valuation allowances against future realization of deductible business interest expense and nondeductible professional fees related to the Merger. During the fiscal year March 31, 2021 (Successor), the Company’s benefit for income taxes was $0.4 million.
For the Predecessor periods Old Bristow prepared the provision for income taxes using a discrete effective tax rate method due to small changes in estimated annual pre-tax income or loss potentially resulting in significant changes in the estimated annual effective tax rate. For the five months ended March 31, 2020 (Successor), Old Bristow estimated the post-
emergence annual effective tax rate from continuing operations and applied this rate to the two-month post-emergence losses from continuing operations. In addition, Old Bristow separately calculated the tax impact of unusual or infrequent items. The tax impacts of such unusual or infrequent items were treated discretely in the quarter in which they occurred.
During the five months ended March 31, 2020 (Successor), and seven months ended October 31, 2019 (Predecessor) and fiscal year ended March 31, 2019 (Predecessor), Old Bristow’s effective tax rates were 0.3%, 5.8% and zero percent, respectively.
The Company’s operations are subject to the jurisdiction of multiple tax authorities, which impose various types of taxes on the Company, including income, value added, sales and payroll taxes. Determination of taxes owed in any jurisdiction requires the interpretation of related tax laws, regulations, judicial decisions and administrative interpretations 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 its interpretations and positions taken. The following table summarizes the years open by jurisdiction as of March 31, 2021 (Successor):
The effects of a tax position are recognized in the period in which the Company determines that it is more-likely-than-not (defined as a more than 50% likelihood) 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. A tax position that meets the more-likely-than-not recognition threshold is measured as the largest amount of tax benefit that is greater than 50% likely of being recognized upon ultimate settlement.
The Company has analyzed filing positions in the federal, state and foreign jurisdictions where it is required to file income tax returns for all open tax years and accrue interest and penalties associated with uncertain tax positions in its provision for income taxes. During the fiscal year ended March 31, 2021(Successor), the Company had a net (benefit) provision of $0.2 million of reserves for tax contingencies primarily related to non-U.S. income tax on foreign leasing operations. During the five months ended March 31, 2020 (Successor) and the seven months ended October 31, 2019 (Predecessor),Old Bristow had a net (benefit) provision of $(0.2) million, $(2.3) million and zero dollars, respectively, of reserves for tax contingencies primarily related to non-U.S. income tax on foreign leasing operations. The Company does not believe that settlement of any tax contingencies would have a significant impact on its consolidated financial position, results of operations or liquidity
As of March 31, 2021 (Successor), the Company had $4.3 million of unrecognized tax benefits, all of which would have an impact on its effective tax rate, if recognized. As of March 31, 2020 (Predecessor), Old Bristow had $4.3 million, of unrecognized tax benefits, all of which would have an impact on its effective tax rate, if recognized.
The activity associated with unrecognized tax benefit is as follows (in thousands):
As of March 31, 2021 (Successor), the Company had aggregated approximately $102.4 million in unremitted earnings generated by foreign subsidiaries. The Company expects to indefinitely reinvest these earnings. The Company has not provided deferred taxes on these unremitted earnings. If the Company’s expectations were to change, withholding and other applicable taxes incurred upon repatriation, if any, are not expected to have a material impact on its results of operations.
Income taxes paid were $15.1 million, $7.6 million, $9.5 million, and $19.4 million during the fiscal year ended March 31 2021 (Successor), five months ended March 31, 2020 (Successor), the seven months ended October 31, 2019 (Predecessor) and fiscal year ended March 31 2019 (Predecessor), respectively.
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/disclosureRef