Entity information:

• Entity registrant name: STONEMOR PARTNERS LP
• CIK: 0001286131
• SEC filing page: http://www.sec.gov/Archives/edgar/data/1286131/000119312517286514/0001193125-17-286514-index.htm
• XBRL Instance: http://www.sec.gov/Archives/edgar/data/1286131/000119312517286514/ston-20161231.xml
• XBRL Cloud Viewer: https://edgardashboard.xbrlcloud.com/flex/viewer/XBRLViewer.html#instance=http://www.sec.gov/Archives/edgar/data/1286131/000119312517286514/ston-20161231.xml
• EDGAR Dashboard: https://edgardashboard.xbrlcloud.com/edgar-dashboard/?cik=0001286131
• Generator: Donnelley Financial Solutions
• Total assets: 1,787,013,000
• Income tax expense (benefit): 1,589,000
• Found reconcilation from statutory to effective rates: True
• Found income tax policy: Coming soon!

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11.	INCOME TAXES

The Partnership is not subject to U.S. federal and most state income taxes. The partners of the Partnership are liable for income tax in regard to their distributive share of the Partnership’s taxable income. Such taxable income may vary substantially from net income reported in the accompanying consolidated financial statements. Certain corporate subsidiaries are subject to federal and state income tax. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and tax carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Partnership records a valuation allowance against its deferred tax assets if it deems that it is more likely than not that some portion or all of the recorded deferred tax assets will not be realizable in future periods.

Income tax expense (benefit) for the years ended December 31, 2016, 2015 and 2014 consisted of the following (in thousands):

 

		Years Ended December 31,
		2016				2015				2014
						(As restated)				(As restated)
Current provision:
State		$	735			$	723			$	869
Federal			—				—				—
Foreign			112				229				302
Total			847				952				1,171
Deferred provision:
State			(111	)			(378	)			347
Federal			852				235				1,046
Foreign			1				124				—
Total			742				(19	)			1,393
Total income tax expense (benefit)		$	1,589			$	933			$	2,564

 

A reconciliation of the federal statutory tax rate to the Partnership’s effective tax rate is as follows:

 

		Years Ended December 31,
		2016				2015				2014
						(As restated)
Computed tax provision (benefit) at the applicable statutory tax rate			35.0	%			35.0	%			35.0	%
State and local taxes net of federal income tax benefit			-1.8	%			-2.6	%			-15.3	%
Tax exempt (income) loss			-3.4	%			-4.1	%			-14.5	%
Change in valuation allowance			-54.5	%			-65.5	%			-130.8	%
Partnership earnings not subject to tax			19.7	%			33.0	%			92.6	%
Permanent differences			-0.5	%			0.2	%			0.9	%
Other			0.0	%			-0.2	%			-3.4	%
Effective tax rate			-5.5	%			-4.2	%			-35.5	%

Significant components of the deferred tax assets and liabilities were as follows (in thousands):

 

		December 31,
		2016				2015
						(As restated)
Deferred tax assets:
Prepaid expenses		$	9,570			$	8,458
State net operating loss			14,557				11,953
Federal net operating loss			104,578				92,689
Foreign net operating loss			2,306				2,306
Other			67				67
Valuation allowance			(88,156	)			(70,224	)
Total deferred tax assets			42,922				45,249
Deferred tax liabilities:
Property, plant and equipment			11,883				9,622
Deferred revenue related to future revenues and accounts receivable			42,128				45,658
Deferred revenue related to cemetery property			8,905				8,907
Total deferred tax liabilities			62,916				64,187
Net deferred tax liabilities		$	19,994			$	18,938

Net deferred tax assets and liabilities were classified on the consolidated balance sheets as follows (in thousands):

 

		December 31,
		2016				2015
						(As restated)
Deferred tax assets		$	64			$	61
Noncurrent assets			64				61
Deferred tax assets			42,858				45,188
Deferred tax liabilities			62,916				64,187
Noncurrent liabilities			20,058				18,999
Net deferred tax liabilities		$	19,994			$	18,938

 

At December 31, 2016, the Partnership had available approximately less than $0.1 million of alternative minimum tax credit carryforwards, which are available indefinitely, $295.9 million of federal net operating loss carryforwards, which will begin to expire in 2017, and $374.1 million of state net operating loss carryforwards, a portion of which expires annually.

Management periodically evaluates all evidence both positive and negative in determining whether a valuation allowance to reduce the carrying value of deferred tax assets is required. The vast majority of the Partnership’s taxable subsidiaries continue to accumulate deferred tax assets that on a more likely than not basis will not be realized. A full valuation allowance continues to be maintained on these taxable subsidiaries. The valuation allowance increased from 2015 to 2016 based on two primary factors. First there was an increase in net deferred tax assets that are not more likely than not to be realized. Second there was an increase in deferred tax liabilities that will reverse outside the carryforward period for our deferred tax assets.

At December 31, 2016, based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Partnership will realize the benefits of these deductible differences. The amount of deferred tax assets considered realizable could be reduced in the future if estimates of future taxable income during the carryforward period are reduced.

In accordance with applicable accounting standards, the Partnership recognizes only the impact of income tax positions that, based upon their merits, are more likely than not to be sustained upon audit by a taxing authority. To evaluate its current tax positions in order to identify any material uncertain tax positions, the Partnership developed a policy of identifying and evaluating uncertain tax positions that considers support for each tax position, industry standards, tax return disclosures and schedules and the significance of each position. It is the Partnership’s policy to recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense. At December 31, 2016 and 2015, the Partnership had no material uncertain tax positions.

The Partnership is not currently under examination by any federal or state jurisdictions. The federal statute of limitations and certain state statutes of limitations are open from 2012 forward.