Note 17. Income Taxes
The components of income tax benefit (expense) are as follows:
|
|
|
For the Year Ended December 31, |
|
|||||||||
|
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|||
|
Current income taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
$ |
(997 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
State |
|
|
(10 |
) |
|
|
— |
|
|
|
— |
|
|
Total income tax benefit (expense) |
|
|
(1,007 |
) |
|
|
— |
|
|
|
— |
|
|
Deferred income taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
|
40,529 |
|
|
|
5,737 |
|
|
|
77 |
|
|
State |
|
|
(698 |
) |
|
|
(162 |
) |
|
|
(681 |
) |
|
Total deferred income tax benefit (expense) |
|
|
39,831 |
|
|
|
5,575 |
|
|
|
(604 |
) |
|
Total income tax benefit (expense) |
|
$ |
38,824 |
|
|
$ |
5,575 |
|
|
$ |
(604 |
) |
The actual income tax benefit (expense) differs from the expected amount computed by applying the federal statutory corporate tax rate of 35% as follows:
|
|
|
For the Year Ended December 31, |
|
|||||||||
|
|
|
2017 |
|
|
2016 |
|
|
2015 |
|
|||
|
Expected tax benefit (expense) at federal statutory rate |
|
$ |
(3,870 |
) |
|
$ |
18,428 |
|
|
$ |
11,353 |
|
|
State income tax benefit (expense), net of federal benefit |
|
|
(460 |
) |
|
|
(105 |
) |
|
|
(680 |
) |
|
Pass-through entities (1) |
|
|
— |
|
|
|
(12,499 |
) |
|
|
(11,315 |
) |
|
Change in tax rate (2) |
|
|
43,431 |
|
|
|
— |
|
|
|
— |
|
|
Change in prior period estimates |
|
|
(315 |
) |
|
|
— |
|
|
|
— |
|
|
Valuation allowance |
|
|
— |
|
|
|
(234 |
) |
|
|
— |
|
|
Other |
|
|
38 |
|
|
|
(15 |
) |
|
|
38 |
|
|
Total income tax benefit (expense) |
|
$ |
38,824 |
|
|
$ |
5,575 |
|
|
$ |
(604 |
) |
|
|
(1) |
Our predecessor was a pass-through entity for federal income tax purposes. |
|
|
(2) |
The federal corporate income tax rate was reduced from 35% to 21% as a result of the Tax Cuts and Jobs Act, which was enacted on December 22, 2017. |
The components of net deferred income tax liabilities are as follows:
|
|
|
For the Year Ended December 31, |
|
|||||
|
|
|
2017 |
|
|
2016 |
|
||
|
Deferred income tax assets: |
|
|
|
|
|
|
|
|
|
Net operating loss carryforwards |
|
$ |
29,866 |
|
|
$ |
2,597 |
|
|
Minimum tax credit carryforward |
|
|
997 |
|
|
|
— |
|
|
Asset retirement obligation |
|
|
3,311 |
|
|
|
4,083 |
|
|
Derivatives |
|
|
16,903 |
|
|
|
8,184 |
|
|
Other |
|
|
2,153 |
|
|
|
870 |
|
|
Total deferred income tax assets |
|
|
53,230 |
|
|
|
15,734 |
|
|
Valuation allowance |
|
|
— |
|
|
|
(232 |
) |
|
Net deferred income tax assets |
|
|
53,230 |
|
|
|
15,502 |
|
|
Deferred income tax liabilities: |
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
124,700 |
|
|
|
127,835 |
|
|
Other |
|
|
— |
|
|
|
219 |
|
|
Total deferred income tax liabilities |
|
|
124,700 |
|
|
|
128,054 |
|
|
Net deferred income tax liabilities |
|
$ |
71,470 |
|
|
$ |
112,552 |
|
Signed into law on December 22, 2017, the Tax Cuts and Jobs Act provides a reduction in the corporate income tax rate from 35% to 21%, effective for tax years beginning after December 31, 2017. The Company recorded a deferred tax benefit of $43.4 million from continuing operations as a result of the re-measurement of its deferred tax assets and liabilities in December 2017, which includes the enactment date.
The Company recorded a deferred tax liability of approximately $117.3 million through stockholders’ equity in connection with its initial public offering and the related restructuring transactions in 2016. The tax basis of its assets and liabilities was unchanged as a result of its initial public offering and the related restructuring transactions, which is reported as a transaction among stockholders for financial reporting purposes.
Uncertain Income Tax Position. The Company must recognize the tax effects of any uncertain tax positions it may adopt, if the position taken by us is more likely than not sustainable based on its technical merits. For those benefits to be recognized, an income tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company had no unrecognized tax benefits as of December 31, 2017 and expects no significant change to the unrecognized tax benefits over the next twelve months ending December 31, 2018.
Tax Audits and Settlements. Generally, the Company's income tax years 2013 through 2016 remain open and subject to examination by federal and state tax authorities, which include Louisiana and Texas and certain other small state taxing jurisdictions where the Company conducts operations. In certain jurisdictions the Company operates through more than one legal entity, each of which may have different open years subject to examination.
Tax Attribute Carryforwards and Valuation Allowance. As of December 31, 2017, the Company had federal net operating loss carryforwards of approximately $134.1 million, which would expire in 2036 and 2037. The Company also had state tax carryforwards of approximately $27.0 million, which would expire in 2036 and 2037. In addition, the Company had alternative minimum tax credit carryforwards of approximately $1.0 million, which is not subject to expiration and will be refundable in tax years beginning after 2017 and before 2022. The Company did not record a valuation allowance against its deferred tax assets including tax attributes based upon management’s evaluation that it is more likely than not that the Company will realize its deferred tax assets.