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Provision for Taxes | 12 Months Ended
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Mar. 31, 2020
Disclosure Text Block [Abstract] |
Provision for Taxes | Note 14. Provision for Taxes Earnings before taxes and the provision for taxes consisted of the following: Years Ended March 31, 2020 2019 2018 (In thousands) Pretax earnings: U.S. $ 372,687 $ 466,175 $ 628,901 Non-U.S. 5,437 11,354 8,712 Total pretax earnings $ 378,124 $ 477,529 $ 637,613 Current provision (benefit) Federal $ (373,817) $ (6,114) $ 21,780 State (9,600) 3,420 6,471 Non-U.S. 949 1,375 1,412 (382,468) (1,319) 29,663 Deferred provision (benefit) Federal 307,846 94,961 (199,415) State 9,728 11,311 15,479 Non-U.S. 970 1,719 1,303 318,544 107,991 (182,633) Provision for income tax expense (benefit) $ (63,924) $ 106,672 $ (152,970) Income taxes paid (net of income tax refunds received) $ 6,859 $ 4,255 $ 68,671 F- 28 amerco and consolidated subsidiaries notes to consolidated financial statements – (continued) The difference between the tax provision at the statutory federal income tax rate and the tax provision attributable to income before taxes was as follows: Years Ended March 31, 2020 2019 2018 (in percentages) Statutory federal income tax rate 21.00 % 21.00 % 31.55 % Increase (reduction) in rate resulting from: Deferred tax liability revaluation – % – % (58.25) % NOL tax rate benefit (38.62) % – % – % State taxes, net of federal benefit 0.02 % 2.41 % 2.33 % Foreign rate differential 0.21 % 0.15 % – % Federal tax credits (0.53) % (0.15) % (0.32) % Transition tax – % (0.20) % 1.83 % Tax-exempt income (0.17) % – % – % Dividend received deduction (0.01) % (0.01) % (0.03) % Phase III tax – % – % 0.63 % Other 1.19 % (0.86) % (1.73) % Actual tax expense (benefit) of operations (16.91) % 22.34 % (23.99) % Significant components of our deferred tax assets and liabilities were as follows: March 31, 2020 2019 Deferred tax assets: (In thousands) Net operating loss and credit carry forwards $ 25,973 $ 90,061 Accrued expenses 105,171 105,727 Policy benefit and losses, claims and loss expenses payable, net 20,189 16,515 Operating leases 22,353 – Total deferred tax assets $ 173,686 $ 212,303 Deferred tax liabilities: Property, plant and equipment $ 1,198,198 $ 940,433 Operating leases 22,353 – Deferred policy acquisition costs 12,795 14,191 Unrealized gains 29,873 4,223 Other 4,010 4,426 Total deferred tax liabilities 1,267,229 963,273 Net deferred tax liability $ 1,093,543 $ 750,970 On March 27, 2020, President Trump signed into U.S. federal law the Coronavirus Aid, Relief and Economic Security (the “CARES Act”), which is aimed at providing emergency assistance and health care for individuals, families, and businesses affected by COVID-19 and generally supporting the U.S. economy. Among other things, the CARES Act includes provisions relating to net operating loss (“NOL”) carryback periods, alternative minimum tax (“AMT”) credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. In particular, the CARES Act allows for NOLs generated in 2018, 2019, or 2020 to be carried back 5 years. F- 29 amerco and consolidated subsidiaries notes to consolidated financial statements – (continued) As a result, the NOL and credit carry-forwards in the above table are primarily attributable to state NOLs. Federal NOLs from fiscal years 2018, 2019 and 2020 have been carried back to prior tax years as provided by the CARES Act. The statutory tax rate for the carryback years was 35% as compared to 21% at present. Consequently, we recognized a benefit amount of $ 146.0 million for fiscal year 2020. It is possible future legislation could reduce or delay our ability to carryback these losses. As of March 31, 2020 and March 31, 2019, AMERCO had state NOLs of $ 337.3 million and $ 172.3 million, respectively, that will begin to expire March 31, 2021, if not utilized. The 2017 Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted on December 22, 2017. The Tax Reform Act reduced the U.S. federal corporate income tax rate from 35% to 21%, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and repealed the deferral of the phase three tax for life insurance companies. The blended statutory Federal Tax Rate for our full fiscal year 2018 was 31.55 %. As of December 22, 2018, we completed our accounting for the tax effects of enactment of the Tax Reform Act. For fiscal year 2018, we recognized a benefit amount of $ 356.6 million, which was included as a component of income tax expense from continuing operations. For fiscal year 2018, we re-measured certain deferred tax assets and liabilities based on the rates they are expected to reverse in the future which is generally 21%. The amount recorded related to the re-measurement of our deferred tax balance was a benefit of $ 371.5 million for fiscal year 2018. As of December 31, 2017, the Company elected to reclassify the income tax effects of the Tax Reform Act in the amount of $ 8.7 million from AOCI to retained earnings under ASU 2018-02. In addition, the Company has adopted the "investment by investment" approach as our accounting policy with regard to releasing disproportionate income tax effects from AOCI. For fiscal year 2018, we calculated and recorded a one-time transition tax on earnings from foreign subsidiaries based on the post-1986 earnings and profits of our Canadian subsidiaries that were previously deferred from U.S. income taxes. The effect of this one-time transition tax liability for our foreign subsidiaries resulted in an increase in income tax expense of $ 10.7 million for fiscal year 2018. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to transition tax, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any remaining undistributed foreign earnings not subject to the transition tax and additional outside basis difference in these entities (i.e., basis difference in excess of that subject to the one-time transition tax) is not practicable. The Tax Reform Act repeals the special rules with regard to distribution to shareholders from pre-1984 policyholders surplus account. This one-time tax was based on the balance of our pre-1984 policyholder surplus account. We reported the amount of our one-time tax liability for Phase Three Tax, resulting in an increase in income tax expense of $ 4.2 million for fiscal year 2018. The Company accounts for uncertainty in income taxes by recognizing the tax benefit or expense from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The Company measures the tax benefits and expenses recognized in the consolidated financial statements from such a position based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. F- 30 amerco and consolidated subsidiaries notes to consolidated financial statements – (continued) A reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period are as follows: Unrecognized Tax Benefits March 31, 2020 2019 (In thousands) Unrecognized tax benefits beginning balance $ 37,201 $ 35,739 Revaluation based on change in after tax benefit – – Additions based on tax positions related to the current year 42 1,887 Reductions for tax positions of prior years (7,606) (46) Settlements (5) (379) Unrecognized tax benefits ending balance $ 29,632 $ 37,201 We recognize interest related to unrecognized tax benefits as interest expense, and penalties as income tax expenses. At March 31, 2020 and 2019, the amount of interest accrued on unrecognized tax benefits was $ 12.8 million and $ 9.5 million, net of tax. During the current year we recorded expense from interest in the amount of $ 3.3 million, net of tax. We file income tax returns in the U.S. federal jurisdiction, and various states and Canadian jurisdictions. While the Company has ongoing audits in Canada and various state jurisdictions, there have been no proposed or anticipated adjustments that would materially impact the financial statements. With some exceptions, we are no longer subject to audit for years prior to the fiscal year ended March 31, 2017. Note 15. Employee Benefit Plans Profit Sharing Plans We provide tax-qualified profit sharing retirement plans for the benefit of eligible employees, former employees and retirees in the United States and Canada. The plans are designed to provide employees with an accumulation of funds for retirement on a tax-deferred basis and provide for annual discretionary employer contributions. Amounts to be contributed are determined by the President and Chairman of the Board of Directors (the “Board”) of the Company under the delegation of authority from the Board, pursuant to the terms of the Profit Sharing Plan. No contributions were made to the profit sharing plan during fiscal 2020, 2019 or 2018. We also provide an employee savings plan which allows participants to defer income under Section 401(k) of the Internal Revenue Code of 1986. ESOP Plan We sponsor an Employee Stock Ownership Plan (“ESOP”) that generally covers all employees with one year or more of service. The ESOP began as a leveraged plan where shares were pledged as collateral for its debt which was originally funded by U-Haul. We made annual contributions to the ESOP equal to the ESOP’s debt service. As the debt was repaid, shares were released from collateral and allocated to active employees, based on the proportion of debt service paid in the year. ESOP shares were committed to be released monthly and ESOP compensation expense was recorded based on the current market price at the end of the month. These shares then become outstanding for the earnings per share computations. In fiscal 2020 we delivered the plan and now contributions are made at the discretion of management with expense being recognized upon the decision to contribute. ESOP compensation expense was $ 10.3 million, $ 11.3 million and $ 11.4 million for fiscal 2020, 2019 and 2018, respectively, which are included in operating expenses in the consolidated statements of operations. F- 31

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- Definition 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. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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