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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes (Loss) income from continuing operations before income taxes for the periods presented below consisted of the following:
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
| (Dollars in millions)
U.S. | $ | (1,771.5) |  |  | $ | (374.2) |  |  | $ | (43.4) |
Non-U.S. | (80.3) |  |  | 231.9 |  |  | 707.5 |
Total | $ | (1,851.8) |  |  | $ | (142.3) |  |  | $ | 664.1 |
Total income tax provision for the periods presented below consisted of the following:
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
| (Dollars in millions)
Current: |  |  |  |  |
U.S. federal | $ | (23.9) |  |  | $ | (21.5) |  |  | $ | (46.8) |
Non-U.S. | 2.4 |  |  | 28.4 |  |  | 29.8 |
State | 1.7 |  |  | (0.3) |  |  | (0.1) |
Total current | (19.8) |  |  | 6.6 |  |  | (17.1) |
Deferred: |  |  |  |  |
U.S. federal | 23.4 |  |  | 20.3 |  |  | 30.4 |
Non-U.S. | 4.4 |  |  | 19.3 |  |  | 5.7 |
State | — |  |  | (0.2) |  |  | (0.6) |
Total deferred | 27.8 |  |  | 39.4 |  |  | 35.5 |
Total income tax provision | $ | 8.0 |  |  | $ | 46.0 |  |  | $ | 18.4 |
The following is a reconciliation of the expected statutory federal income tax (benefit) expense to the Company’s income tax provision for the periods presented below:
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
| (Dollars in millions)
Expected income tax (benefit) expense at U.S. federal statutory rate | $ | (388.9) |  |  | $ | (29.9) |  |  | $ | 139.5 |
Changes in valuation allowance, income tax | 410.1 |  |  | (32.0) |  |  | (284.6) |
Remeasurement due to the Tax Cuts and Jobs Act | — |  |  | — |  |  | 9.5 |
Changes in tax reserves | (7.7) |  |  | 3.0 |  |  | 2.1 |
Excess depletion | (14.5) |  |  | (19.3) |  |  | (28.5) |
Foreign earnings repatriation | — |  |  | 76.1 |  |  | — |
Foreign earnings provision differential | 16.4 |  |  | 45.6 |  |  | 97.1 |
Global intangible low-taxed income | — |  |  | 6.1 |  |  | 68.2 |
Remeasurement of foreign income tax accounts | 2.9 |  |  | (0.1) |  |  | (0.2) |
State income taxes, net of federal tax benefit | (6.8) |  |  | (13.2) |  |  | 3.2 |
Other, net | (3.5) |  |  | 9.7 |  |  | 12.1 |
Total income tax provision | $ | 8.0 |  |  | $ | 46.0 |  |  | $ | 18.4 |
Certain reconciliation items included in the above table exclude the remeasurement of foreign income tax accounts as these foreign currency effects are separately presented. On December 22, 2017, the Tax Cuts and Jobs Act (the Act) was signed into law making significant changes to the U.S. Internal Revenue Code. Key provisions of the Act that impacted the Company include: (i) repeal of the corporate alternative minimum tax (AMT) system, (ii) reduction of the U.S. federal corporate tax rate from 35% to 21% and (iii) the new global intangible low-taxed income (GILTI). Deferred tax assets and liabilities attributable to the U.S. were remeasured from 35% to the reduced tax rate of 21%. Upon completion of the filing of both U.S. and foreign tax returns for the 2017 tax year, the Company recorded an additional provision of $9.5 million related to the remeasurement and an offsetting valuation allowance during the year ended December 31, 2018. The Company elected to recognize the tax on GILTI as a period expense in the period the tax is incurred and due to foreign tested losses, the Company did not record a provision for the year ended December 31, 2020. The Company recorded a provision of $6.1 million and $68.2 million for the years ended December 31, 2019 and 2018, which was fully offset by the release of valuation allowance associated with the net operating losses (NOLs) that absorbed the GILTI inclusion. Due to the repeal of the corporate AMT system, the Company’s existing AMT credits as of December 31, 2017 were anticipated to be refunded through the 2021 federal tax return. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act was signed into law and contains numerous tax provisions including the acceleration of refunds of previously generated AMT credits. In 2020, the Company received AMT credit refunds of $46.9 million and is expecting an additional refund of $1.2 million in 2021. The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities as of December 31, 2020 and 2019 consisted of the following:
| December 31,
| 2020 |  | 2019
| (Dollars in millions)
Deferred tax assets: |  |  |
Tax loss carryforwards and credits | $ | 1,377.4 |  |  | $ | 1,530.9 |
Property, plant, equipment and mine development, principally due to differences in depreciation, depletion and asset impairments | 573.7 |  |  | 276.6 |
Accrued postretirement benefit obligations | 93.8 |  |  | 142.6 |
Asset retirement obligations | 95.5 |  |  | 86.6 |
Employee benefits | 22.8 |  |  | 25.3 |
Take-or-pay obligations | 11.0 |  |  | 12.0 |
Investments and other assets | 88.0 |  |  | 89.0 |
Workers’ compensation obligations | 7.8 |  |  | 7.6 |
Operating lease liabilities | 17.5 |  |  | 20.8 |
Other | 24.1 |  |  | 16.7 |
Total gross deferred tax assets | 2,311.6 |  |  | 2,208.1 |
Valuation allowance, income tax | (2,287.3) |  |  | (2,068.4) |
Total deferred tax assets | 24.3 |  |  | 139.7 |
Deferred tax liabilities: |  |  |
Property, plant, equipment and mine development, principally due to differences in depreciation, depletion and asset impairments | 36.2 |  |  | 100.9 |
Operating lease right-of-use assets | 13.5 |  |  | 20.8 |
Coal supply agreements | 3.1 |  |  | 3.1 |
Investments and other assets | 1.6 |  |  | 15.4 |
Total deferred tax liabilities | 54.4 |  |  | 140.2 |
Net deferred tax liability | $ | (30.1) |  |  | $ | (0.5) |
Deferred taxes are classified as follows: |  |  |
Noncurrent deferred income tax asset | $ | 4.9 |  |  | $ | 28.3 |
Noncurrent deferred income tax liability | (35.0) |  |  | (28.8) |
Net deferred tax liability | $ | (30.1) |  |  | $ | (0.5) |
As of December 31, 2020, the Company had gross Australia NOLs of $2.1 billion in Australian dollars and gross U.S. federal NOLs of $2.8 billion. During 2020 the Company reduced its gross Australia NOLs by $1.3 billion in Australian dollars due to a cancellation of intercompany debt in accordance with Australia tax law. The Company’s tax loss carryforwards and credits of $1.4 billion as of December 31, 2020 were comprised primarily of net Australia NOLs and capital tax loss carryforwards of $590.8 million, net federal NOLs of $580.3 million, state NOLs of $76.3 million, tax general business credits (GBCs) of $112.6 million and other foreign NOLs of $15.0 million. The foreign tax loss carryforwards have no expiration date. The federal NOLs begin to expire in 2036. The state NOLs begin to expire in 2021 and the GBCs begin to expire in 2027. In assessing the near-term use of NOLs and tax credits and corresponding valuation allowance adjustments, the Company evaluated the expected level of future taxable income, available tax planning strategies, reversals of existing taxable temporary differences and taxable income in carryback years. For the year ended December 31, 2020, the Company continued to record valuation allowances of $2.3 billion against net deferred tax asset positions, comprised primarily of $1.2 billion in the U.S. and $1.1 billion in Australia. Recognition of those valuation allowances was driven by recent cumulative book losses, as determined by considering all sources of available income (including items classified as discontinued operations or recorded directly to “Accumulated other comprehensive income”), which limited the Company’s ability to look to future taxable income in assessing the realizability of the related assets. Unrecognized Tax Benefits Net unrecognized tax benefits (excluding interest and penalties) were recorded as follows in the consolidated balance sheets as of December 31, 2020 and 2019:
| December 31,
| 2020 |  | 2019
| (Dollars in millions)
Deferred income taxes | $ | 7.8 |  |  | $ | 15.5 |
Other noncurrent liabilities | 1.3 |  |  | 1.0 |
Net unrecognized tax benefits | $ | 9.1 |  |  | $ | 16.5 |
Gross unrecognized tax benefits | $ | 9.1 |  |  | $ | 16.5 |
The amount of the Company’s gross unrecognized tax benefits decreased by $7.4 million since December 31, 2019 due primarily to adjustments for effectively settled positions, partially offset by additions for current positions. The amount of the net unrecognized tax benefits that, if recognized, would directly affect the effective tax rate was $9.1 million and $16.5 million at December 31, 2020 and 2019, respectively. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for the periods presented below is as follows:
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
| (Dollars in millions)
Balance at beginning of period | $ | 16.5 |  |  | $ | 14.0 |  |  | $ | 12.7 |
Additions for current year tax positions | 1.9 |  |  | 2.2 |  |  | 1.8 |
(Reductions) additions for prior year tax positions | (9.3) |  |  | 0.3 |  |  | — |
Reductions for settlements with tax authorities | — |  |  | — |  |  | (0.5) |
Balance at end of period | $ | 9.1 |  |  | $ | 16.5 |  |  | $ | 14.0 |
The Company recognizes interest and penalties related to unrecognized tax benefits in its income tax provision. The Company recorded $0.4 million of gross interest and penalties for both of the years ended December 31, 2019 and 2018, and reversed gross interest and penalties of $0.4 million for the year ended December 31, 2020. The Company had $5.4 million and $5.8 million of accrued gross interest and penalties related to unrecognized tax benefits at December 31, 2020 and 2019, respectively. The Company expects a decrease of $2.2 million in its net unrecognized tax benefits during the next twelve months is reasonably possible. Tax Returns Subject to Examination The Company’s federal income tax returns for the 2018 through 2019 tax years are subject to potential examinations by the Internal Revenue Service. The Company’s state income tax returns for the tax years 2014 and thereafter remain potentially subject to examination by various state taxing authorities due to NOL carryforwards. Australian income tax returns for tax years 2013 through 2019 continue to be subject to potential examinations by the Australian Taxation Office. Foreign Earnings As of December 31, 2020, the Company has a consolidated earnings deficit outside the U.S. but with some immaterial unremitted earnings in certain jurisdictions. The Company continues to be permanently reinvested with respect to its historical earnings. However, when appropriate, the Company has the ability to access foreign cash without incurring residual cash taxes due to the existence of NOLs. Tax Payments and Refunds The following table summarizes the Company’s income tax refunds, net for the periods presented below:
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
| (Dollars in millions)
U.S. — federal | $ | (44.6) |  |  | $ | (45.7) |  |  | $ | (103.1) |
U.S. — state and local | 1.6 |  |  | 0.3 |  |  | (1.6) |
Non-U.S. | 3.1 |  |  | 36.3 |  |  | 40.7 |
Total income tax refunds, net | $ | (39.9) |  |  | $ | (9.1) |  |  | $ | (64.0) |

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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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