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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES Benefit The benefit from income taxes from continuing operations is as follows (in millions):
| Year Ended December 31,
| 2018 |  | 2017
Current: |  |  |
Federal | $ | — |  |  | $ | — |
State and local | — |  |  | (0.1 | )
Foreign | — |  |  | — |
| — |  |  | (0.1 | )
Deferred: |  |  |
Federal | — |  |  | — |
State and local | — |  |  | — |
Foreign | — |  |  | — |
| — |  |  | — |
| $ | — |  |  | $ | (0.1 | )
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,
| 2018 |  | 2017
Deferred tax assets: |  |  |
Employee benefits costs | $ | 73.6 |  |  | $ | 79.9 |
Inventory | 11.1 |  |  | 2.4 |
Property, plant and equipment | 185.9 |  |  | 187.0 |
Net operating loss and credit carryforwards | 187.1 |  |  | 166.9 |
Accrued expenses | 0.9 |  |  | 0.9 |
Long-term debt and financing costs | 15.3 |  |  | 17.3 |
Other | 0.2 |  |  | 5.5 |
| 474.1 |  |  | 459.9 |
Valuation allowance | (456.6 | ) |  | (440.7 | )
Deferred tax assets, net of valuation allowance | $ | 17.5 |  |  | $ | 19.2 |
Deferred tax liabilities: |  |  |
Intangible assets | $ | 16.0 |  |  | $ | 17.7 |
Prepaid expenses | 1.5 |  |  | 1.5 |
Deferred tax liabilities | $ | 17.5 |  |  | $ | 19.2 |
| $ | — |  |  | $ | — |
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 operating losses since 2011 and substantial uncertainty to generate future taxable income that would lead to realization of the net deferred tax assets. When a change in the tax rate or tax law has an impact on deferred taxes, we apply the change based on the years in which the deferred taxes are expected to reverse. The Company records the impact of the change in its consolidated financial statements in the period of enactment. For the year ended December 31, 2017, the Company recorded a decrease in net deferred tax assets before valuation allowance which resulted primarily from the remeasurement at 21% in accordance with t he Tax Act. 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. The Company has federal net operating losses of $791.3 million generated through December 31, 2017 that currently expire through 2037. In addition, the Company has federal net operating losses and business interest expense carry forwards of $89.2 million and $10.1 million, respectively, generated after December 31, 2017, that do not expire. The Company has concluded that a full valuation allowance is needed for all federal net operating losses. In 2014, the federal net operating losses as well as other tax attributes consisting primarily of tax basis in property of approximately $15.3 million were 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 $0.3 million that currently expire through 2038. The deferred tax assets for state net operating losses and state unrealized built-in loss deductions have been reduced as a result of Centrus’ tax 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 can 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 post-ownership change period through certain depreciation and loss deductions, the same annual limitation for loss and tax credit carryforwards also applies generally to a built-in loss when it is recognized, unless the exception applies. Centrus can 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 state limitation will apply so that the combination of loss carryforwards and recognized built-in losses cannot exceed $2.9 million annually. Effective Tax Rate A reconciliation of income taxes calculated based on the federal statutory income tax rate and the effective tax rate follows:
| Year Ended December 31,
| 2018 |  | 2017
Federal statutory tax rate | 21 | % |  | 35 | %
Valuation allowance against net deferred tax assets | (15 | ) |  | (2,156 | )
State rate changes | (6 | ) |  | — |
Executive compensation | (1 | ) |  | — |
State income tax expense, net of federal benefit | 1 |  |  | 1 |
Tax Cuts and Jobs Act of 2017 | — |  |  | 2,382 |
Gain on early extinguishment of debt | — |  |  | (268 | )
Interest expense | — |  |  | 4 |
Other non-deductible expenses | — |  |  | 1 |
Effective tax rate | — | % |  | (1 | )%
The Tax Act enacted on December 22, 2017 reduced the U.S. federal corporate income tax rate from 35% to 21%, effective January 1, 2018. The SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under Accounting Standards Codification 740, Income Taxes (“ASC 740”). In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete, but it can determine a reasonable estimate, it must record a provisional estimate in the financial statements. The Company has completed its accounting for the tax effects of the Tax Act, and based on the Company’s net operating loss carryovers and full valuation allowance, there is no impact to its consolidated financial statements. As a result of the reduction of the federal corporate income tax rate, the net deferred tax assets have been remeasured as of December 31, 2017. Primarily as a result of the remeasurement, the effective tax rate for the year ended December 31, 2017 includes a decrease to the net deferred tax assets of $288.9 million, or an increase to the effective tax rate of 2,382%. The effective tax rate also includes a decrease to the valuation allowance against net deferred tax assets of $261.5 million, or a change to the effective tax rate of (2,156)%, and an adjustment to the gain on early extinguishment of debt of $32.5 million or a change to the effective tax rate of (268)%. The Tax Act did not affect the income tax provision for the year ended December 31, 2017. The effective tax rate for the year ended December 31, 2018 includes an increase to the valuation allowance against net deferred tax assets of $15.9 million, or a change to the effective tax rate of (15)%, and a $6 million decrease to the state deferred tax assets resulting from state rate changes, or a change to the effective tax rate of (6)%. 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 $0.2 million as of December 31, 2018 and $0.3 million as of December 31, 2017. If recognized, these tax benefits would impact the effective tax rate. As a result of changes to unrecognized tax benefits, the income tax provision (state tax, net of federal benefit) decreased $0.1 million during the years ended December 31, 2018 and December 31, 2017. The liability for unrecognized tax benefits in the table below relates to unrecognized state income tax benefits. Centrus believes that the liability for unrecognized tax benefits will not change significantly in the next 12 months. A reconciliation of the beginning and ending amount of unrecognized tax benefits follows (in millions):
| Year Ended December 31,
| 2018 |  | 2017
Balance at beginning of the period | $ | 0.3 |  |  | $ | 0.4 |
Additions to tax positions of current period | — |  |  | 0.1 |
Reductions to tax positions of prior years | (0.1 | ) |  | (0.2 | )
Balance at end of the period | $ | 0.2 |  |  | $ | 0.3 |
Centrus and its subsidiaries file income tax returns with the U.S. government and various states and foreign jurisdictions. As of December 31, 2018, the federal and Maryland statutes of limitation are closed with respect to all tax years through 2014, and the Kentucky statute of limitations is closed with respect to all tax years through 2013. 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 less than $0.1 million for the years ended December 31, 2018 and 2017. Accrued interest and penalties for income taxes, included as a component of Other Long-Term Liabilities, totaled less than $0.1 million as of December 31, 2018 and 2017.

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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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