Entity information:
INCOME TAXES
Income tax expense (benefit)
Our consolidated income from continuing operations before income taxes was generated in the following jurisdictions (in thousands):
 
Year Ended December 31,
 
2017
 
2016
 
2015
U.S.
$
(64,423
)
 
$
(766
)
 
$
46,728

Foreign
44,885

 
25,297

 
29,618

Consolidated
$
(19,538
)
 
$
24,531

 
$
76,346


The following table summarizes income tax provision (benefit) from continuing operations by jurisdiction (in thousands):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Current income tax provision:
 
 
 
 
 
Foreign
$
7,058

 
$
2,821

 
$
4,301

U.S. federal
—

 
—

 
—

U.S. state
383

 
—

 
32

 
7,441

 
2,821

 
4,333

Deferred income tax provision (benefit):
 
 
 
 
 
Foreign
5,318

 
4,071

 
4,747

U.S. federal
(15,379
)
 
5,142

 
21,865

U.S. state
232

 
(766
)
 
2,585

 
(9,829
)
 
8,447

 
29,197

Provision (benefit) for income taxes
$
(2,388
)
 
$
11,268

 
$
33,530


The following table reconciles income tax provision at the U.S. federal statutory rate to the consolidated provision (benefit) for income taxes (in thousands):
 
Year Ended December 31,
 
2017
 
2016
 
2015
Income from continuing operations before income taxes
$
(19,538
)
 
$
24,531

 
$
76,346

U.S. federal statutory rate
35
%
 
35
%
 
35
%
Provision at statutory rate
(6,838
)
 
8,586

 
26,721

State income taxes—net of federal benefit
401

 
(498
)
 
1,701

Effect of rates other than statutory
(3,842
)
 
(1,966
)
 
(2,306
)
Effect of U.S. taxation on foreign branches
15,710

 
8,854

 
10,366

Foreign tax adjustment, prior years
—

 
—

 
7

Noncontrolling interest
—

 
(3,908
)
 
(4,373
)
Foreign tax credit and offset to branch deferreds
45,245

 
(6,026
)
 
(1,740
)
Effect of U.S. deduction of foreign tax
(7,514
)
 
—

 
—

Impact of valuation allowance on deferred tax assets
(65,327
)
 
6,026

 
1,740

Foreign withholding taxes
858

 
18

 
6

Stock-based compensation
1,351

 
—

 
—

Effect of U.S. federal statutory rate reduction
17,638

—

—

 
—

Other, net
(70
)
 
182

 
1,408

Provision (benefit) for income taxes
$
(2,388
)
 
$
11,268

 
$
33,530


For the years ended December 31, 2017, 2016 and 2015, the foreign subsidiaries are disregarded entities for U.S. federal income tax purposes. The foreign earnings are taxed in foreign jurisdictions as well as in the U.S. Foreign tax credits, subject to limitations, or foreign tax deductions are available to reduce U.S. taxes. The decision to deduct foreign taxes or claim the foreign tax credit is made with respect to each tax period.
On December 22, 2017, the “Tax Cuts and Jobs Act”, H.R. 1 (“Act”) was signed into law. The Act provides for a permanent reduction in the U.S. federal statutory rate from 35% to 21% effective January 1, 2018. Under ASC 740, Income Taxes, the effects of the law change are recorded in the period of enactment. The deferred positions of the Company at December 31, 2017, have been remeasured at the lower tax rate, resulting in a discrete deferred tax expense for the period of $17.6 million. There is a discrete expense of $1.4 million related to the vesting of restricted stock during the period and a discrete tax benefit of $27.6 million related to a change of position to deduct foreign taxes in lieu of claiming a foreign tax credit for the tax years 2014 through 2016. The foreign tax credit for these years was previously offset by a full valuation allowance and, accordingly, there is no net tax expense or balance sheet impact from their reversal. The discrete benefit arises from recognition of the increase in our net operating loss carryforward resulting from the deduction of foreign taxes.
Deferred tax positions
Deferred income taxes reflect the effects of temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for income tax purposes. Significant components of deferred tax assets and liabilities are as follows at December 31, 2017 and 2016 (in thousands):
 
December 31,
 
2017
 
2016
Deferred tax assets:
 
 
 
Net operating loss and other credit carryforwards
$
44,867

 
$
58,129

Compensation and benefits
7,156

 
9,411

Inventories
322

 
231

Intangible assets
16,714

 
34,573

Pension plan
1,760

 
4,811

Allowance for doubtful accounts
956

 
971

Deferred revenue
4,953

 
4,451

Equity investment in partnerships
—

 
54,686

Foreign tax credit and offset to branch deferreds
56,719

 
110,052

Other
28,201

 
46,601

less: valuation allowance
(45,682
)
 
(110,243
)
Net deferred tax assets
115,966

 
213,673

Deferred tax liabilities:
 
 
 
Intangible assets
(5,074
)
 
(4,709
)
Prepaid expenses
(1,447
)
 
(136
)
Property, plant and equipment
(108,646
)
 
(223,325
)
Equity investment in partnerships
(24,315
)
 
—

Other
(2,402
)
 
(4,411
)
Total deferred tax liabilities
(141,884
)
 
(232,581
)
Net deferred tax liabilities
$
(25,918
)
 
$
(18,908
)

At December 31, 2017, we had a cumulative U.S. federal net operating loss of approximately $165.5 million that can be carried forward to apply against taxable income generated in future years. This carry forward begins to expire in 2031. We had cumulative U.S. state net operating losses of approximately $148.7 million available for carryforward, which begin to expire in 2018. We had foreign net operating losses of $20.9 million available for indefinite carryforward and $0.4 million that will expire in 2027. We had foreign tax credits of approximately $44.6 million available for carry forward, which begin to expire in 2020.
The valuation allowance decreased by $64.6 million during 2017. The change related to a net decrease of $65.4 million for foreign tax credits and offset to branch deferreds, an increase of $0.1 million related to foreign net operating losses and an increase of $0.7 million related to state net operating losses.
We have a valuation allowance on a small portion of our state net operating loss carryovers with shorter carryover periods and our foreign tax credit carryover. We have not released the valuation allowance on the foreign tax credits due to the foreign tax credit limitation and the relative subjectivity of forecasts of the relational magnitude of U.S. and foreign taxable income in future periods, as well as the shorter carryover period available for the credits. Deferred tax assets are reduced by a valuation allowance when a determination is made that it is more likely than not that some, or all, of the deferred tax assets will not be realized based on the weight of all available evidence. Evidence which is objectively verifiable carries a higher weight in the analysis. The ultimate realization of deferred tax assets is dependent upon the existence of sufficient taxable income of the appropriate character within the carryback and carryforward period available under the tax law. Sources of taxable income include future reversals of existing taxable temporary differences, future earnings and available tax planning strategies.
We have analyzed filing positions in all of the federal, state and foreign jurisdictions where we are required to file income tax returns and determined that no accruals related to uncertainty in tax positions are required. All income tax years of the Company ending after the emergence from bankruptcy remain open for examination in U.S. jurisdictions under general operation of the statute of limitations, including special provisions with regard to net operating loss carryovers. In foreign jurisdictions, all tax periods prior to the emergence from bankruptcy are closed. The statute of limitations has not been waived with respect to any foreign jurisdictions post emergence and tax periods are open for examination in accordance with the general statutes of each foreign jurisdiction. Currently, there are no examinations in progress for our federal and state jurisdictions. Canada Revenue Agency has initiated an income tax audit of SemCAMS ULC for the tax years 2013 through 2015. No other foreign jurisdictions are currently under audit.