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Income Taxes | 12 Months Ended
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Dec. 31, 2015
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES Provision (Benefit) The provision (benefit) for income taxes from continuing operations is as follows (in millions):
| Successor |  |  | Predecessor
| Year Ended December 31, 2015 |  | Three Months Ended December 31, 2014 |  |  | Nine Months Ended September 30, 2014
Current: |  |  |  |  |  |
Federal | $ | — |  |  | $ | — |  |  |  | $ | — |
State and local | (0.3 | ) |  | — |  |  |  | (1.0 | )
Foreign | — |  |  | — |  |  |  | — |
| (0.3 | ) |  | — |  |  |  | (1.0 | )
Deferred: |  |  |  |  |  |
Federal | — |  |  | (2.4 | ) |  |  | — |
State and local | — |  |  | — |  |  |  | — |
Foreign | — |  |  | — |  |  |  | — |
| — |  |  | (2.4 | ) |  |  | — |
| $ | (0.3 | ) |  | $ | (2.4 | ) |  |  | $ | (1.0 | )
Deferred Taxes Future tax consequences of temporary differences between the carrying amounts for financial reporting purposes and the Company’s estimate of the tax bases of its assets and liabilities result in deferred tax assets and liabilities, as follows (in millions):
| December 31,
| 2015 |  | 2014
Deferred tax assets: |  |  |
Plant lease turnover and other exit costs | $ | 3.1 |  |  | $ | 0.9 |
Employee benefits costs | 137.7 |  |  | 148.5 |
Inventory | 3.1 |  |  | 6.6 |
Property, plant and equipment | 437.1 |  |  | 450.2 |
Waste disposition | 0.3 |  |  | 1.3 |
Net operating loss and credit carryforwards | 114.3 |  |  | 76.7 |
Accrued expenses | 8.8 |  |  | 5.4 |
Other | 11.9 |  |  | 14.6 |
| $ | 716.3 |  |  | $ | 704.2 |
Valuation allowance | (676.4 | ) |  | (659.6 | )
Deferred tax assets, net of valuation allowance | $ | 39.9 |  |  | $ | 44.6 |
Deferred tax liabilities: |  |  |
Intangible assets | 37.3 |  |  | 42.0 |
Prepaid expenses | 2.6 |  |  | 2.6 |
Deferred tax liabilities | $ | 39.9 |  |  | $ | 44.6 |
| $ | — |  |  | $ | — |
The valuation allowance reduces the net deferred tax assets to their net realizable value. There is a full valuation allowance against net deferred taxes due to annual losses since 2011 and substantial uncertainty to generate future taxable income that would lead to realization of the net deferred tax assets. The ultimate realization of the net deferred tax assets is dependent upon generating sufficient taxable income in future years when deferred tax assets are recoverable or are expected to reverse. In November 2015, the FASB issued Accounting Standards Update 2015-17, Balance Sheet Classification of Deferred Taxes. The Company has elected early application of the accounting pronouncement as permitted. The new guidance has been applied to all periods presented in the current Annual Report. To simplify presentation, the new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. As a result, each jurisdiction has only one net noncurrent deferred tax asset or liability. This eliminates the need for an entity to analyze whether deferred tax items are related to specific assets or liabilities for financial reporting and determine the corresponding classification of those specific assets or liabilities. The new guidance also eliminates the need to estimate the timing of reversal of temporary differences for classification in situations in which a deferred tax liability or asset is not related to an asset or liability for financial reporting. The impact of applying the new guidance retrospectively is the elimination of $26.0 million noncurrent deferred tax assets and $26.0 million current deferred tax liabilities resulting in net noncurrent deferred taxes on the balance sheet of $0 at December 31, 2014. Centrus has federal net operating losses of $324.7 million that currently expire through 2035. The federal net operating losses as well as other tax attributes consisting primarily of tax basis in property of approximately $15.3 million have been reduced as a result of Centrus’ cancellation of debt income of approximately $340 million as prescribed by Internal Revenue Code Section 108. Centrus also has state net operating losses of $15.4 million that currently expire in 2035. The deferred tax assets for state net operating losses and state unrealized built-in loss deductions have been reduced as a result of Centrus’ ownership change and cancellation of debt income. Centrus experienced an ownership change as defined under Internal Revenue Code Section 382 (i.e., a more than 50% change in stock ownership change on the Effective Date of September 30, 2014). Because the ownership change occurred on the Effective Date, Centrus is subject to the rules either under Internal Revenue Code Section 382(l)(5) or 382(l)(6) as explained below. Under Internal Revenue Code Section 382(l)(6), the use of any federal and state net operating loss carryforwards and tax credits generated prior to the ownership change (that are not reduced by attribute reduction as mentioned above) are subject to an annual limitation of approximately $2.9 million for federal purposes and a pre-apportioned $2.9 million for state purposes. Centrus has an unrealized built-in loss as of the Effective Date that limits certain depreciation and loss deductions recognized during the five-year period following the Effective Date that would also be subject to the annual limitation. Internal Revenue Code Section 382(l)(5) provides that no annual limitation would apply for certain corporations that emerge from bankruptcy that qualify under this section as of the emergence Effective Date and do not experience a second ownership change during the two-year period immediately following the Effective Date. Centrus believes the requirements under Internal Revenue Code Section 382(l)(5) have been met and has prepared its financial statements and federal and state income tax returns assuming there will be no annual limitation. If another ownership change occurs during the two-year period immediately following the Effective Date, the annual limitation will be zero starting as of the date of the second ownership change. Therefore, a second ownership change would result in the loss of the federal and state net operating loss carryforwards. Furthermore, no built-in loss deductions would be recognized during the five-year period following the ownership change. Centrus continues to monitor its ownership shifts on a quarterly basis. Effective Tax Rate A reconciliation of income taxes calculated based on the federal statutory income tax rate of 35% and the effective tax rate follows:
| Successor |  |  | Predecessor
| Year Ended December 31, 2015 |  | Three Months Ended December 31, 2014 |  |  | Nine Months Ended September 30, 2014
Federal statutory tax rate | 35 | % |  | 35 | % |  |  | 35 | %
State income taxes, net of federal | — |  |  | 1 |  |  |  | — |
Basis allocated to exempt income | — |  |  | 17 |  |  |  | — |
Excess reorganization value | (26 | ) |  | — |  |  |  | (14 | )
Other nondeductible expenses | (1 | ) |  | (4 | ) |  |  | — |
Valuation allowance against deferred tax assets | (9 | ) |  | (39 | ) |  |  | (23 | )
Restructuring costs | — |  |  | — |  |  |  | 2 |
State rate changes and tax attributes | 1 |  |  | (5 | ) |  |  | — |
| — | % |  | 5 | % |  |  | — | %
The effective tax rate for the year ended December 31, 2015 includes an adjustment to the excess reorganization value of $137.2 million or 26%, and an adjustment to the valuation allowance against net deferred tax assets of $16.8 million, or 9%. The effective tax rate for the three months ended December 31, 2014 includes an adjustment to the valuation allowance against net deferred tax assets of $17.3 million or 39%. The effective tax rate for the nine months ended September 30, 2014 includes an adjustment to the valuation allowance of $77.4 million, or 23%. The three months ended December 31, 2014 also includes an increase of 17% to the effective tax rate for additional tax basis of $22.2 million written off related to retirements at the Paducah plant for depreciation previously allocated to exempt income under the extraterritorial income exclusion. Intraperiod Tax Allocation Intraperiod tax allocation rules require that all items, including other comprehensive income and discontinued operations, be considered for purposes of determining the amount of tax benefit that results from a loss in continuing operations. As a result, an income tax benefit of $2.4 million was recorded in continuing operations for the three months ended December 31, 2014, with an offsetting income tax expense of $2.4 million recorded in other comprehensive income. Uncertain Tax Positions Accounting standards require that a tax position meet a minimum recognition threshold in order for the related tax benefit to be recognized in the financial statements. The liability for unrecognized tax benefits, included in other long-term liabilities, was $1.0 million as of December 31, 2015 and $1.3 million as of December 31, 2014. If recognized, these tax benefits would impact the effective tax rate. As a result of changes to unrecognized tax benefits, the tax provision (state tax, net of federal benefit) decreased $0.2 million during the twelve months ended December 31, 2015 and $0.7 million during the nine months ended September 30, 2014. The liability for unrecognized tax benefits in the table below relates to state tax unrecognized tax benefits. Centrus believes that the liability for unrecognized tax benefits will be reduced by $0.6 million in the next 12 months. A reconciliation of the beginning and ending amount of unrecognized tax benefits follows (in millions):
| Successor |  |  | Predecessor
| Year Ended December 31, 2015 |  | Three Months Ended December 31, 2014 |  |  | Nine Months Ended September 30, 2014
Balance at beginning of the period | $ | 1.3 |  |  | $ | 1.3 |  |  |  | $ | 2.3 |
Additions to tax positions of current period | — |  |  | — |  |  |  | — |
Reductions to tax positions of prior years | (0.3 | ) |  | — |  |  |  | (1.0 | )
Balance at end of the period | $ | 1.0 |  |  | $ | 1.3 |  |  |  | $ | 1.3 |
Centrus and its subsidiaries file income tax returns with the U.S. government and various states and foreign jurisdictions. The IRS started an examination of Centrus’ 2008 through 2011 federal income tax returns during 2012 that was completed in the second quarter of 2014 with no adjustment to the reported tax. As of December 31, 2015, the federal statute of limitations is closed with respect to all tax years through 2011. As of December 31, 2015, the Kentucky statute of limitations for calendar tax years 2011 forward had not yet expired. Centrus recognizes accrued interest related to uncertain tax positions as a component of interest expense. Reversals of previously accrued income tax related interest is typically offset to interest expense, but if the amount is significant, it is reclassified to interest income in the consolidated statement of operations. Centrus recognizes the increase or decrease of accrued penalties for income taxes as a component of selling, general and administrative expense in the consolidated statement of operations. The impact of accrued interest and penalties in the consolidated statement of operations was a reduction to expenses of $0.1 million for the twelve months ended December 31, 2015, an increase to expenses of less than $0.1 million for the three months ended December 31, 2014, and a reduction to expenses of $0.3 million for the nine months ended September 30, 2014. Accrued interest and penalties, included as a component of accounts payable and accrued liabilities, totaled $0.2 million as of December 31, 2015 and $0.3 million as of December 31, 2014.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 + Details
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