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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The operations conducted by the Company’s REIT entities are generally not subject to U.S. federal and state income taxation. The New Zealand JV is subject to corporate level tax in New Zealand. Non-REIT qualifying operations are conducted by the Company’s taxable REIT subsidiaries (“TRS”). During 2017, 2016 and 2015, the primary businesses performed in the TRS included log trading and certain real estate activities, such as the sale and entitlement of development HBU properties. ALTERNATIVE FUEL MIXTURE CREDIT (“AFMC”) AND CELLULOSIC BIOFUEL PRODUCER CREDIT (“CBPC”) The U.S. Internal Revenue Code allowed two credits for taxpayers that produced and used an alternative fuel in the operation of their business during calendar year 2009. The AFMC is a $0.50 per gallon refundable excise tax credit (which is not taxable), while the CBPC is a $1.01 per gallon credit that is nonrefundable, taxable and has limitations based on an entity’s tax liability. Rayonier produced and used an alternative fuel (“black liquor”) in its Performance Fibers business, which qualified for both credits. The Company claimed the AFMC on its original 2009 income tax return. In 2013, management approved an exchange of black liquor gallons previously claimed under the AFMC for the CBPC. The net tax benefit from this exchange of $18.8 million was recorded in discontinued operations. As a result of the spin-off of the Performance Fibers business in 2014, the Company recorded a $13.6 million valuation allowance in continuing operations related to CPBC remaining with the Company’s taxable REIT subsidiary and the limited potential use of the CBPC prior to its expiration on December 31, 2019. In 2015, a $1.0 million return-to-accrual adjustment was recorded related to the CBPC which resulted in a corresponding increase in the CBPC valuation allowance to $14.6 million. PROVISION FOR INCOME TAXES FROM CONTINUING OPERATIONS The (provision for)/benefit from income taxes consisted of the following:
| 2017 |  | 2016 |  | 2015
Current |  |  |  |  |
U.S. federal |  | $261 |  |  | — |  |  |  | ($624 | )
State | (38 | ) |  | (254 | ) |  | 226 |
Foreign | (245 | ) |  | (241 | ) |  | (308 | )
| (22 | ) |  | (495 | ) |  | (706 | )
Deferred |  |  |  |  |
U.S. federal | 13,028 |  |  | 5,403 |  |  | 3,702 |
State | — |  |  | (280 | ) |  | 107 |
Foreign | (21,659 | ) |  | (6,079 | ) |  | 2,360 |
| (8,631 | ) |  | (956 | ) |  | 6,169 |
Changes in valuation allowance | (13,028 | ) |  | (3,613 | ) |  | (4,604 | )
Total |  | ($21,681 | ) |  |  | ($5,064 | ) |  |  | $859 |
A reconciliation of the U.S. federal statutory income tax rate to the actual income tax rate was as follows:
|  | 2017 |  | 2016 |  | 2015
U.S. federal statutory income tax rate |  |  | ($64,141 | ) |  | (35.0 | )% |  |  | ($77,992 | ) |  | (35.0 | )% |  |  | ($15,079 | ) |  | (35.0 | )%
U.S. and foreign REIT income |  | 63,813 |  |  | 34.8 |  |  | 82,037 |  |  | 36.8 |  |  | 17,191 |  |  | 39.9 |
Matariki Group and Rayonier New Zealand Ltd |  | (19,182 | ) |  | (10.5 | ) |  | (4,799 | ) |  | (2.2 | ) |  | 3,457 |  |  | 8.0 |
Transition tax |  | (3,506 | ) |  | (1.9 | ) |  | — |  |  | — |  |  | — |  |  | — |
Change in valuation allowance |  | (13,028 | ) |  | (7.1 | ) |  | (3,613 | ) |  | (1.6 | ) |  | (3,607 | ) |  | (8.4 | )
ASU No. 2016-16 adoption impact |  | 16,631 |  |  | 9.1 |  |  | — |  |  | — |  |  | — |  |  | — |
Deemed repatriation of unremitted foreign earnings |  | 7,368 |  |  | 4.0 |  |  | — |  |  | — |  |  | — |  |  | — |
Reduction of deferred tax asset for statutory rate change |  | (10,499 | ) |  | (5.7 | ) |  | — |  |  | — |  |  | — |  |  | — |
CBPC valuation allowance |  | — |  |  | — |  |  | — |  |  | — |  |  | (997 | ) |  | (2.3 | )
Other |  | 863 |  |  | 0.5 |  |  | (697 | ) |  | (0.3 | ) |  | (106 | ) |  | (0.2 | )
Income tax (expense) benefit as reported for net income |  |  | ($21,681 | ) |  | (11.8 | )% |  |  | ($5,064 | ) |  | (2.3 | )% |  |  | $859 |  |  | 2.0 | %
The Company’s effective tax rate is below the 35 percent U.S. statutory rate primarily due to tax benefits associated with being a REIT. DEFERRED TAXES Deferred income taxes result from recording revenues and expenses in different periods for financial reporting versus tax reporting. The nature of the temporary differences and the resulting net deferred tax asset/liability for the two years ended December 31, were as follows:
| 2017 |  | 2016
Gross deferred tax assets: |  |  |
Pension, postretirement and other employee benefits |  | $1,017 |  |  |  | $1,648 |
New Zealand JV | 40,224 |  |  | 60,452 |
CBPC Tax Credit Carry Forwards | 14,641 |  |  | 14,641 |
Capitalized real estate costs | 7,058 |  |  | 11,489 |
U.S. TRS Net Operating Loss | 1,872 |  |  | 4,730 |
Land basis difference | 11,090 |  |  | — |
Other | 5,079 |  |  | 9,165 |
Total gross deferred tax assets | 80,981 |  |  | 102,125 |
Less: Valuation allowance | (34,889 | ) |  | (21,861 | )
Total deferred tax assets after valuation allowance |  | $46,092 |  |  |  | $80,264 |
Gross deferred tax liabilities: |  |  |
Accelerated depreciation | (35 | ) |  | (1,322 | )
Repatriation of foreign earnings | — |  |  | (7,368 | )
New Zealand JV | (72,527 | ) |  | (70,315 | )
Timber installment sale | (4,706 | ) |  | (7,601 | )
Other | (1,270 | ) |  | (3,833 | )
Total gross deferred tax liabilities | (78,538 | ) |  | (90,439 | )
Net deferred tax liability reported as noncurrent |  | ($32,446 | ) |  |  | ($10,175 | )
Included below are the following foreign net operating loss (“NOL”) and tax credit carryforwards as of December 31, 2017:
| Gross Amount |  | Valuation Allowance |  | Expiration
2017 |  |  |  |  |
New Zealand JV NOL Carryforwards |  | $137,949 |  |  | — |  |  | None
U.S. Net Deferred Tax Asset | 20,248 |  |  | (20,248 | ) |  | None
Cellulosic Biofuel Producer Credit | 14,641 |  |  | (14,641 | ) |  | 2019
Total Valuation Allowance |  |  |  | ($34,889 | ) |  |
2016 |  |  |  |  |
New Zealand JV NOL Carryforwards |  | $215,898 |  |  | — |  |  | None
U.S. Net Deferred Tax Asset | 7,220 |  |  | (7,220 | ) |  | None
Cellulosic Biofuel Producer Credit | 14,641 |  |  | (14,641 | ) |  | 2019
Total Valuation Allowance |  |  |  | ($21,861 | ) |  |
PREPAID TAXES In the first quarter of 2017, the Company early adopted ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory. ASU No. 2016-16 requires income tax consequences of intra-entity transfers of assets other than inventory be recognized in the period in which they occur. See Note 2 - Summary of Significant Accounting Policies. As a result, a cumulative-effect adjustment to retained earnings was recorded for the long-term prepaid federal income tax of $14.4 million related to recognized built-in gains on 2006, 2008 and 2010 intercompany sales of timberlands between the REIT and TRS. Taxes for the transaction were paid at the time of sale, but the gain and income tax expense were deferred. See the Consolidated Statement of Shareholders’ Equity for the cumulative-effect adjustment to retained earnings due to the adoption of this standard. UNRECOGNIZED TAX BENEFITS The Company recognizes the impact of a tax position if a position is “more-likely-than-not” to prevail. A reconciliation of the beginning and ending unrecognized tax benefits for the three years ended December 31 is as follows:
| 2017 |  | 2016 |  | 2015
Balance at January 1, |  | $135 |  |  |  | $135 |  |  | — |
Decreases related to prior year tax positions | (135 | ) |  | — |  |  | — |
Increases related to prior year tax positions | — |  |  | — |  |  | 135 |
Balance at December 31, | — |  |  |  | $135 |  |  |  | $135 |
The unrecognized tax benefit of $135 thousand as of December 31, 2016 and December 31, 2015 related to a prior year deduction, in conjunction with the spin-off of the Performance Fibers business. The unrecognized tax benefit was reduced to zero in 2017 due to the lapse of the applicable statute of limitations. There is no amount of unrecognized tax benefits that, if recognized, would have affected the effective tax rate at December 31, 2017, 2016 and 2015. The Company records interest (and penalties, if applicable) related to unrecognized tax benefits in non-operating expenses. The Company recorded no benefit to interest expense in 2017, 2016 and 2015, respectively. The Company had no recorded liabilities for the payment of interest at December 31, 2017 and 2016. TAX STATUTES The following table provides detail of the tax years that remain open to examination by the IRS and other significant taxing jurisdictions:
Taxing Jurisdiction | Open Tax Years
U.S. Internal Revenue Service | 2014 - 2016
New Zealand Inland Revenue | 2012 - 2016
U.S. TAX REFORM The Tax Cuts and Jobs Act (the “Act”) was signed into law on December 22, 2017 making significant changes to the Internal Revenue Code. Changes include a permanent reduction in the U.S. statutory corporate income tax rate from 35% to 21% beginning in 2018 and a one-time transition tax on the deemed repatriation of deferred foreign earnings as of December 31, 2017. The SEC issued Staff Accounting Bulletin 118 (“SAB 118”), which provides additional clarification regarding the application of ASC Topic 740 when registrants do not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Act for the reporting period in which the Act was enacted. SAB 118 provides a measurement period beginning in the reporting period that includes the Act’s enactment date and ending when the registrant has obtained, prepared, and analyzed the information needed in order to complete the accounting requirements, but in no circumstances should the measurement period extend beyond one year from the enactment date. The Company has not completed its assessment of the accounting implications of the Act. However, the Company has reasonably calculated an estimate of the impact of the Act in the year end income tax provision and recorded $0.1 million of additional income tax expense as of December 31, 2017. This amount was offset by the Alternative Minimum Tax credit benefit, resulting in a zero net effect to income tax expense. This provisional amount is related to the one-time transition tax on the deemed repatriation of deferred foreign earnings as of December 31, 2017. The remeasurement of certain deferred tax assets and liabilities resulting from the permanent reduction in the U.S. statutory corporate tax rate resulted in a provisional amount of zero as the change in rate was offset by the change in the valuation allowance. As the Company completes its analysis of the Act, it may make adjustments to the provisional amounts. Any subsequent adjustments to these amounts will be recorded to current tax expense in 2018 when the analysis is complete.

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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 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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