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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | NOTE 18. INCOME TAXES As a REIT, we generally are not subject to federal and state corporate income taxes on income from investments in real estate that we distribute to our shareholders. We conduct certain activities through our PotlatchDeltic TRS which are subject to corporate level federal and state income taxes. These activities are principally comprised of our wood products manufacturing operations and certain real estate investments. Therefore, income tax expense or benefit is primarily due to income or loss of the PotlatchDeltic TRS, as well as permanent book versus tax differences. We are also subject to corporate taxes on built-in gains (the excess of fair market value over tax basis on the merger date) on sales of former Deltic real property held by the REIT during the five years following the Deltic merger. The sale of standing timber is not subject to built-in gains tax. During the year-ended December 31, 2019 we had carryover tax basis in the MDF facility from the Deltic merger that was sold in February 2019 and as a result, we recorded a reduction to deferred tax liabilities and increase to income taxes payable of $15.8 million at the date of sale. See Note 3: Sale of Deltic MDF Facility for further details. On December 22, 2017, H.R. 1, Tax Cuts and Jobs Act (the Act) was enacted. The Act contained significant changes to corporate taxation, including the reduction of the corporate tax rate from 35% to 21% effective January 1, 2018. The tax rate reduction required a remeasurement of our deferred tax assets and liabilities as of the date of enactment. Accordingly, net deferred tax assets, including the related valuation allowance, were reduced by $10.5 million and the change was recorded as an increase to the 2017 tax provision. In addition, during 2018 we recorded a net tax benefit of $5.0 million primarily related to deducting contributions to our qualified pension plans on our 2017 federal tax returns at the higher 2017 income tax rate. Income tax expense consists of the following for the years ended December 31:
(in thousands) |  | 2019 |  |  | 2018 |  |  | 2017 |
Current |  | $ | 12,055 |  |  | $ | 7,038 |  |  | $ | 16,657 |
Deferred |  |  | (11,082 | ) |  |  | 11,370 |  |  |  | 14,325 |
Net operating loss carryforwards |  |  | 37 |  |  |  | 791 |  |  |  | 1,039 |
Income tax provision |  | $ | 1,010 |  |  | $ | 19,199 |  |  | $ | 32,021 |
Income tax expense differs from the amount computed by applying the statutory federal income tax rate of 21% for 2019 and 2018 and 35% for 2017 to income before income taxes due to the following for the years ended December 31:
(in thousands) |  | 2019 |  |  | 2018 |  |  | 2017 |
U.S. federal statutory income tax |  | $ | 11,901 |  |  | $ | 29,837 |  |  | $ | 41,466 |
REIT income not subject to federal income tax |  |  | (11,285 | ) |  |  | (8,773 | ) |  |  | (20,651 | )
U.S. tax rate change on deferred tax assets and liabilities |  |  | — |  |  |  | — |  |  |  | 10,528 |
Pension contribution deducted at higher tax rate |  |  | — |  |  |  | (5,665 | ) |  |  | — |
Change in valuation allowance |  |  | (395 | ) |  |  | — |  |  |  | 140 |
State income taxes, net of federal income tax |  |  | 903 |  |  |  | 3,712 |  |  |  | 2,608 |
Domestic production activities deduction |  |  | — |  |  |  | — |  |  |  | (1,511 | )
Permanent book-tax differences |  |  | (793 | ) |  |  | (771 | ) |  |  | (252 | )
Research and development credits |  |  | — |  |  |  | — |  |  |  | (294 | )
Other items, net |  |  | 679 |  |  |  | 859 |  |  |  | (13 | )
Income tax provision |  | $ | 1,010 |  |  | $ | 19,199 |  |  | $ | 32,021 |
Effective tax rate |  |  | 1.8 | % |  |  | 13.5 | % |  |  | 27.0 | %
The tax effects of significant temporary differences creating deferred tax assets and liabilities at December 31 were:
(in thousands) |  | 2019 |  |  | 2018 |
Deferred tax assets: |  |  |  |  |  |  |  |
Pension and other postretirement employee benefits |  | $ | 32,110 |  |  | $ | 30,523 |
Inventories |  |  | 754 |  |  |  | 601 |
Tax credits |  |  | 2,190 |  |  |  | 2,688 |
Nondeductible accruals |  |  | 815 |  |  |  | 1,039 |
Incentive compensation |  |  | 1,044 |  |  |  | 1,000 |
Employee benefits |  |  | 1,316 |  |  |  | 1,452 |
Other |  |  | 1,296 |  |  |  | 320 |
Total deferred tax assets |  |  | 39,525 |  |  |  | 37,623 |
Valuation allowance |  |  | (395 | ) |  |  | (790 | )
Deferred tax assets, net of valuation allowance |  |  | 39,130 |  |  |  | 36,833 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Timber and timberlands, net |  |  | (965 | ) |  |  | (1,025 | )
Property, plant and equipment, net |  |  | (50,901 | ) |  |  | (58,909 | )
Intangible assets, net |  |  | (3,778 | ) |  |  | (4,134 | )
Real estate development |  |  | (1,402 | ) |  |  | (2,035 | )
Other |  |  | (2,249 | ) |  |  | (2,739 | )
Total deferred tax liabilities |  |  | (59,295 | ) |  |  | (68,842 | )
Deferred tax liabilities, net |  | $ | (20,165 | ) |  | $ | (32,009 | )
As of December 31, 2019, we had no state or federal net operating loss carryforwards. We have Idaho Investment Tax Credits of $2.8 million that expire from 2022 through 2033. We use the flow-through method of accounting for investment tax credits. With the exception of the $0.4 million valuation allowance related to certain Idaho Investment Tax Credit carryforwards we expect will expire prior to realization, we believe it is more likely than not that we will have sufficient future taxable income to realize our deferred tax assets. The following table summarizes the tax years subject to examination by major taxing jurisdictions:
Jurisdiction |  | Years
Federal |  | 2016 — 2019
Arkansas |  | 2016 — 2019
Idaho |  | 2016 — 2019
Michigan |  | 2015 — 2019
Minnesota |  | 2015 — 2019
As of December 31, 2019, we had no unrecognized tax benefits which, if recognized, would impact the effective tax rate. There was $0.6 million of unrecognized tax benefits at December 31, 2018 and 2017. A reconciliation of the beginning and ending unrecognized tax benefits is as follows:
(in thousands) |  | 2019 |  |  | 2018 |
Balance at January 1 |  | $ | 564 |  |  | $ | 564 |
Additions for tax positions of prior years |  |  | — |  |  |  | — |
Reduction for tax positions of prior years |  |  | (564 | ) |  |  | — |
Balance at December 31 |  | $ | — |  |  | $ | 564 |
We reflect accrued interest related to tax obligations, as well as penalties, in our provision for income taxes. For the years ended December 31, 2019, 2018 and 2017, we recognized insignificant amounts related to interest and penalties in our tax provision. At December 31, 2019, 2018 and 2017, we had insignificant amounts of accrued interest related to tax obligations and no accrued interest receivable with respect to open tax refunds.

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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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