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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES Provision (Benefit) The provision (benefit) for income taxes from continuing operations is as follows (in millions):
| Year Ended December 31,
| 2016 |  | 2015
Current: |  |  |
Federal | $ | — |  |  | $ | — |
State and local | (0.6 | ) |  | (0.3 | )
Foreign | — |  |  | — |
| (0.6 | ) |  | (0.3 | )
Deferred: |  |  |
Federal | — |  |  | — |
State and local | — |  |  | — |
Foreign | — |  |  | — |
| — |  |  | — |
| $ | (0.6 | ) |  | $ | (0.3 | )
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,
| 2016 |  | 2015
Deferred tax assets: |  |  |
Employee benefits costs | $ | 139.3 |  |  | $ | 140.8 |
Inventory | — |  |  | 3.1 |
Property, plant and equipment | 318.8 |  |  | 437.1 |
Net operating loss and credit carryforwards | 254.9 |  |  | 114.3 |
Accrued expenses | 14.9 |  |  | 9.1 |
Other | 12.6 |  |  | 11.9 |
| 740.5 |  |  | 716.3 |
Valuation allowance | (702.2 | ) |  | (676.4 | )
Deferred tax assets, net of valuation allowance | $ | 38.3 |  |  | $ | 39.9 |
Deferred tax liabilities: |  |  |
Inventory | $ | 2.6 |  |  | $ | — |
Intangible assets | 33.0 |  |  | 37.3 |
Prepaid expenses | 2.7 |  |  | 2.6 |
Deferred tax liabilities | $ | 38.3 |  |  | $ | 39.9 |
| $ | — |  |  | $ | — |
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. Centrus has federal net operating losses of $725.8 million that currently expire through 2036. 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 $17.7 million that currently expire in 2036. 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 in 2014. Centrus experienced an ownership change as defined under Internal Revenue Code Section 382 on September 30, 2014 when it emerged from bankruptcy. Generally, after an ownership change, the use of federal and state net operating loss carryforwards and tax credits generated prior to the ownership change are subject to an annual limitation. However, there is an exception available to qualifying corporations that eliminates the annual limitation. Centrus is able to utilize this exception for federal purposes, but not for state purposes. The pre-apportioned annual state limitation is $2.9 million. Centrus also had an unrealized built-in loss as of the ownership change date. To the extent this built-in loss is recognized during the five-year period following the ownership change through certain depreciation and loss deductions, the same annual limitation for loss and tax credit carryforwards generally also applies to a built-in loss when it is recognized, unless the exception applies. Centrus is able to utilize the same exception for federal purposes when the built-in loss is recognized, but not for state purposes. To the extent the built-in loss is recognized during the five-year post-ownership change period, the same pre-apportioned annual state limitation will apply so that the combination of loss carryforwards and recognized built-in losses cannot exceed $2.9 million. 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:
| Year Ended December 31,
| 2016 |  | 2015
Federal statutory tax rate | 35 | % |  | 35 | %
Gain on early extinguishment of debt | 6 |  |  | — |
Excess reorganization value | — |  |  | (26 | )
Interest expense | (3 | ) |  | (1 | )
Valuation allowance against deferred tax assets | (36 | ) |  | (9 | )
State rate changes and tax attributes | (1 | ) |  | 1 |
| 1 | % |  | — | %
The effective tax rate for the year ended December 31, 2016, includes an adjustment to the valuation allowance against net deferred tax assets of $24.4 million, or 36%. 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%. 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 $0.4 million as of December 31, 2016 and $1.0 million as of December 31, 2015. 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 $0.4 million during the year ended December 31, 2016 and $0.2 million during the year ended December 31, 2015. 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 $0.2 million in the next 12 months. A reconciliation of the beginning and ending amount of unrecognized tax benefits follows (in millions):
| Year Ended December 31,
| 2016 |  | 2015
Balance at beginning of the period | $ | 1.0 |  |  | $ | 1.3 |
Additions to tax positions of current period | — |  |  | — |
Reductions to tax positions of prior years | (0.6 | ) |  | (0.3 | )
Balance at end of the period | $ | 0.4 |  |  | $ | 1.0 |
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, 2016, the federal and Maryland statutes of limitation are closed with respect to all tax years through 2012, and the Kentucky statute of limitations is closed with respect to all tax years through 2011. Centrus recognizes accrued interest related to uncertain tax positions as a component of interest expense. Reversals of previously accrued interest for income taxes is typically offset against 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 for income taxes in the consolidated statement of operations was a reduction to expenses of $0.1 million for years ended December 31, 2016 and 2015. Accrued interest and penalties for income taxes, included as a component of accounts payable and accrued liabilities, totaled $0.1 million as of December 31, 2016, and $0.2 million as of December 31, 2015.

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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=65882285&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=65882285&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=65882285&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=65882285&loc=d3e32537-109319 + Details
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