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INCOME TAXES | 12 Months Ended
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Mar. 31, 2020
Income Tax Disclosure [Abstract] |
INCOME TAXES | (J) Income Taxes The provision for income taxes includes the following components:
|  | For the Years Ended March 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | (dollars in thousands) |
Current Provision (Benefit) - |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (102,080 | ) |  | $ | 32,710 |  |  | $ | 58,695 |
State |  |  | 923 |  |  |  | 6,536 |  |  |  | 5,989 |
|  |  | (101,157 | ) |  |  | 39,246 |  |  |  | 64,684 |
Deferred Provision (Benefit) - |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 76,255 |  |  |  | (21,039 | ) |  |  | (52,333 | )
State |  |  | (268 | ) |  |  | (7,332 | ) |  |  | 2,979 |
|  |  | 75,987 |  |  |  | (28,371 | ) |  |  | (49,354 | )
Provision (Benefit) for Income Taxes |  | $ | (25,170 | ) |  | $ | 10,875 |  |  | $ | 15,330 |
The effective tax rates vary from the federal statutory rates due to the following items:
|  | For the Years Ended March 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | (dollars in thousands) |
Earnings Before Income Taxes |  | $ | 45,724 |  |  | $ | 79,735 |  |  | $ | 271,962 |
Income Taxes at Statutory Rate |  | $ | 9,602 |  |  | $ | 16,744 |  |  | $ | 85,804 |
Increases (Decreases) in Tax Resulting from - |  |  |  |  |  |  |  |  |  |  |  |
State Income Taxes, net |  |  | (1,703 | ) |  |  | (629 | ) |  |  | 6,139 |
Statutory Depletion in Excess of Cost |  |  | (3,078 | ) |  |  | (3,834 | ) |  |  | (6,341 | )
Domestic Production Activities Deduction |  |  | — |  |  |  | — |  |  |  | (5,995 | )
Excess Tax Benefit from Stock Compensation |  |  | 307 |  |  |  | (651 | ) |  |  | (4,129 | )
Meals and Entertainment Disallowance |  |  | 537 |  |  |  | 610 |  |  |  | 567 |
Limitation on Officer's Compensation |  |  | 1,018 |  |  |  | 1,434 |  |  |  | 246 |
Impact of Tax Cuts and Jobs Act of 2017 |  |  | — |  |  |  | — |  |  |  | (61,692 | )
Impact of CARES Act of 2020 |  |  | (35,936 | ) |  |  | — |  |  |  | — |
Credits |  |  | (2,150 | ) |  |  | (940 | ) |  |  | — |
Valuation Allowance |  |  | 2,212 |  |  |  | (2,100 | ) |  |  | — |
Unrecognized Tax Benefits |  |  | 4,200 |  |  |  | — |  |  |  | — |
Other |  |  | (179 | ) |  |  | 241 |  |  |  | 731 |
Provision for Income Taxes |  | $ | (25,170 | ) |  | $ | 10,875 |  |  | $ | 15,330 |
Effective Tax Rate |  |  | (55 | )% |  |  | 14 | % |  |  | 6 | %
Components of deferred income taxes are as follows:
|  | March 31, |
|  | 2020 |  |  | 2019 |
|  | (dollars in thousands) |
Items Giving Rise to Deferred Tax Liabilities - |  |  |  |  |  |  |  |
Excess Tax Depreciation and Amortization |  | $ | (199,096 | ) |  | $ | (108,505 | )
State Income Taxes, net |  |  | (12,225 | ) |  |  | (9,236 | )
Right-of-Use Asset |  |  | (5,441 | ) |  |  | — |
Other |  |  | (5,764 | ) |  |  | (5,628 | )
Total Deferred Tax Liabilities |  | $ | (222,526 | ) |  | $ | (123,369 | )
Items Giving Rise to Deferred Tax Assets - |  |  |  |  |  |  |  |
Change in Accruals |  | $ | 9,373 |  |  | $ | 8,601 |
Depletable Assets |  |  | 12,632 |  |  |  | 8,995 |
Inventory |  |  | 7,217 |  |  |  | 6,046 |
Bad Debts |  |  | 2,642 |  |  |  | 2,169 |
Long-term Incentive Compensation Plan |  |  | 5,590 |  |  |  | 5,154 |
Credits and Other Carryforwards |  |  | 19,861 |  |  |  | 12,289 |
Lease Liability |  |  | 11,384 |  |  |  | — |
Pension |  |  | 937 |  |  |  | 921 |
Subtotal |  |  | 69,636 |  |  |  | 44,175 |
Valuation Allowance |  |  | (13,777 | ) |  |  | (11,565 | )
Total Deferred Tax Assets |  | $ | 55,859 |  |  | $ | 32,610 |
We record Deferred Tax Assets and Liabilities based upon estimates of their realizable value with such estimates based upon likely future tax consequences. In assessing the need for a valuation allowance, we consider both positive and negative evidence related to the likelihood of realization of the Deferred Tax Assets. If, based on the weight of available evidence, it is more likely than not that a Deferred Tax Asset will not be realized, we record a Valuation Allowance. During fiscal 2020, we recorded an increase in the V aluation A llowance against our Deferred Tax Assets of $2.2 million. Th e in crease is because of changes in estimates of the realizability of certain deferred tax assets related to certain state income tax credits. We have federal and state net operating loss carryforwards of $5.4 million at March 31, 2020, and approximately $1.0 million at March 31, 2019. We have federal Research and Development (R&D) and state income tax credits of $2.2 million at March 31, 2020 and $2.0 million at March 31, 2019, net of Valuation Allowances. The federal R&D credits can be carried forward 20 years and the state income tax credits may be carried forward indefinitely. We file income tax returns in U.S. federal and various state jurisdictions. The Company is currently subject to U.S. federal income tax examinations for the year ended March 31, 2017 and forward. Uncertain tax positions We are subject to audit examinations at federal, state, and local levels by tax authorities in those jurisdictions who may challenge the treatment or reporting of any return item. The tax matters challenged by the tax authorities are typically complex; therefore, the ultimate outcome of these challenges is subject to uncertainty. We review and assess all tax positions subject to uncertainty on a more-likely-than-not standard with respect to ultimate outcome if challenged. We measure and record tax benefit or expense only when the more-likely-than-not threshold is met. The change in unrecognized tax benefits for the years ended March 31, 2020, 2019, and 2018 was as follows:
|  | For the Years Ended March 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | (dollars in thousands) |
Balance at Beginning of Year |  | $ | — |  |  | $ | — |  |  | $ | — |
Increase related to current tax positions |  |  | 4,200 |  |  |  | — |  |  |  | — |
Decrease related to current tax positions |  |  | — |  |  |  | — |  |  |  | — |
Payments |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | 4,200 |  |  | $ | — |  |  | $ | — |
We recorded a $4.2 million reserve as a result of a position we will take on our fiscal 2020 federal tax return related to the interest limitation under IRC Section 163(j) and the resulting carryback allowed under the CARES Act. This tax return position reflects an expected update to U.S. Department of the Treasury regulations. We recorded a reserve for financial reporting purposes to reflect the U.S. Department of the Treasury's current proposed regulations under Section 163(j) which have not yet been withdrawn. We will reevaluate this reserve when new guidance is issued, which is currently expected in calendar 2020. We classify interest and penalties related to uncertain tax positions as current income tax expense. We recorded no interest and penalties for each of the fiscal years ended March 31, 2020, 2019, and 2018, respectively. Tax Cuts and Jobs Act The Tax Cuts and Jobs Act (the Act) was enacted on December 22, 2017. The Act, among other changes, reduces the U.S. federal corporate tax rate from 35% to 21%, allows for the immediate 100% deductibility of certain capital expenditures, repeals the domestic production deduction, and further limits the deductibility of certain executive compensation. In December 2017, we recorded a tax benefit of $61.7 million related to the change in corporate tax rates that reduced our deferred tax liabilities after the initial assessment of the tax effects of the Act. In the quarter ended December 31, 2018, we finalized our accounting for the Act with no material changes from our provisional calculations. CARES Act The CARES Act was enacted on March 27, 2020. The CARES Act, among other changes, allows for a five-year carryback of net operating losses (NOL) generated beginning in 2018 and ending before 2021. In March 2020, we recorded a tax benefit of $35.9 million related to the carryback and utilization of NOLs in prior-year tax periods at higher rates than the current statutory rate. The overall benefit created by the CARES Act was partially offset by a related $4.2 million reserve we recorded as a result of the interest limitation under IRC section 163(j).

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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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