|12 Months Ended|
Dec. 31, 2017
|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 2017, 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.
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 2017, we received refunds of $11.9 million and made income tax payments of $0.2 million. During 2016, we received $7.8 million of refunds and made income tax payments of $0.3 million. The refunds received in 2017 and 2016 were primarily due to net operating loss (“NOL”) carryback claims made pursuant to IRC Section 172 (f) (related to rules of “specified liability losses”). During 2015, we did not make any payments for federal or state income taxes or receive any refunds of significance.
Income Taxes Receivables
As of December 31, 2017, we have recorded a current income taxes receivable of $13.0 million and a non-current income taxes receivable of $52.1 million. The current income taxes receivable primarily relate to a net operating loss carried back claim for 2017. The non-current income taxes receivable relates to our NOL claims for the years 2012, 2013 and 2014 that were carried back to prior years. 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 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, 2017 (in thousands):
During 2017, we recorded a decrease in the valuation allowance of $118.6 million and in 2016, we recorded an increase in the valuation allowance of $52.9 million related to federal and state deferred tax assets. As a result of the enactment of the Tax Cuts and Jobs Act (“TCJA”), on December 22, 2017, our net deferred tax assets and its respective valuation allowance were provisionally adjusted downwards by $105.9 million as of December 31, 2017. 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, 2017 and 2016, we had a valuation allowance related to our federal and state deferred tax assets. Due to the timing and the complexity involved in applying the provisions of the TCJA, our application of the TCJA may require further adjustments during 2018 in the determination of the final effects in our financial statements.
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 2017, 2016 and 2015, the amounts recognized in income tax expense were immaterial.
Years open to examination
The tax years from 2013 through 2017 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