|12 Months Ended|
Dec. 31, 2016
|Income Tax Disclosure [Abstract]|
12. Income Taxes
Income Tax Expense (Benefit)
Components of income tax expense (benefit) were as follows (in thousands):
Effective Tax Rate Reconciliation
The reconciliation of income taxes computed at the U.S. federal statutory tax rate to our income tax benefit is as follows (in thousands, except percentages):
Our effective tax rate for the years 2016 and 2015 differed from the federal statutory rate of 35.0% primarily due to recording and adjusting a valuation allowance for our deferred tax assets, which is discussed below. Our effective tax rate for the year 2014 is distorted due to a small pre-tax loss; consequently, our permanent differences have a larger impact on our effective tax rate.
Deferred Tax Assets and Liabilities
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities were as follows (in thousands):
During 2016, we made income tax payments of $0.3 million and received $7.8 million of refunds, which includes an income tax refund of $5.8 million related to an NOL claim for 2015 carried back to 2005 filed on Form 1139, Corporation Application for Tentative Refund. During 2015, we did not make any payments for federal or state income taxes or receive any refunds of significance. During 2014, we did not make any payments for federal and state income taxes and we received refunds of $3.0 million.
Income Tax Receivables
As of December 31, 2016, we have recorded current income tax receivables of $11.9 million and non-current income tax receivables of $52.1 million. The current income tax receivables primarily relates to a net operating loss claim for 2016 carried back to 2006 and is included in the receivable line Joint interest, insurance reimbursement and other on the Consolidated Balance Sheet. The non-current income tax receivables relates to our NOL claims for the years 2012, 2013 and 2014 that were carried back to the years 2003, 2004, 2007, 2010 and 2011 filed on Form 1120X, U.S. Corporation Income Tax Return. These carryback claims are made pursuant to IRC Section 172(f), which permits certain platform dismantlement, well abandonment and site clearance costs to be carried back 10 years. The refund claims filed on Form 1120X will require a review by the Congressional Joint Committee on Taxation and are accordingly classified as non-current.
Net Operating Loss and Tax Credit Carryovers
The table below presents the details of our net operating loss and tax credit carryovers as of December 31, 2016 (in thousands):
Exchange Transaction Tax Gain
The tax gain on the Exchange Transaction associated with the cancellation of a portion of our debt was not recognized pursuant to Internal Revenue Code Section 108. Certain tax attributes including net operating losses, alternative minimum tax credit, general business credit carryovers and the tax basis of assets are required to be reduced, as reflected in the table above. No carryovers will be available to 2017.
During 2016 and 2015, we recorded increases in the valuation allowance of $52.9 million and $232.9 million, respectively, related to federal and state deferred tax assets. Deferred tax assets are recorded related to net operating losses and temporary differences between the book and tax basis of assets and liabilities expected to produce tax deductions in future periods. The realization of these assets depends on recognition of sufficient future taxable income in specific tax jurisdictions in which those temporary differences or net operating losses are deductible. In assessing the need for a valuation allowance on our deferred tax assets, we consider whether it is more likely than not that some portion or all of them will not be realized. As of December 31, 2016 and 2015, we had a valuation allowance related to Federal and state deferred tax assets.
Uncertain Tax Positions
The table below sets forth the beginning and ending balance of the total amount of unrecognized tax benefits. There are no unrecognized benefits that would impact the effective tax rate if recognized. While amounts could change in the next 12 months, we do not anticipate it having a material impact on our financial statements.
Balances in the uncertain tax positions are as follows (in thousands):
We recognize interest and penalties related to uncertain tax positions in income tax expense. For 2016, 2015 and 2014, the amounts recognized in income tax expense were immaterial.
Years open to examination
The tax years from 2013 through 2016 remain open to examination by the tax jurisdictions to which we are subject.
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