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Income Taxes | 9 Months Ended
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Sep. 30, 2017
Income Taxes |
Income Taxes | 10. Income Taxes The Company calculates the provision for income taxes during interim reporting periods in accordance with ASC 740 Income Taxes (“ASC 740”) by applying an estimated annual effective tax rate to the full year projected pretax book income or loss excluding certain discrete items. The effective tax rate including discrete items related to stock compensation, Canadian tax settlement and the change in our valuation allowance was (2,507.15)% and (1,232.94)% for the three and nine months ended September 30, 2017, as compared to (25.56)% and 8.00% for the three and nine months ended September 30, 2016. The income tax benefit in the current quarter is due to a $766.2 million reduction of our deferred tax asset valuation allowance. Our effective tax rate is impacted by a number of factors, the most significant of which is the movement in the valuation allowance related to our deferred tax assets. Due to the impact of the changes in our valuation allowance, the effective tax rates for 2017 and 2016 are not correlated to the amount of our income or loss before income taxes. ASC 740 requires that deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amount and the tax basis of existing assets and liabilities and are measured at the prevailing enacted tax rates that will be in effect when these differences are realized or settled. During the period ended September 30, 2017 and December 31, 2016, the Company had a net deferred tax asset and liability balance of $635.9 million and $126.9 million, respectively, within its condensed consolidated balance sheet. The accounting guidance also requires analysis regarding whether valuation allowances should be established based on the consideration of all available evidence using a “more-likely-than-not” realization standard. We evaluate our deferred tax assets quarterly to determine if valuation allowances are required. The realization of the deferred tax assets ultimately depends upon the existence of sufficient taxable income in future periods. We established a full valuation allowance against our deferred tax assets beginning in the fourth quarter of 2013 and regularly analyze all available positive and negative evidence in determining the continuing need for a valuation allowance. Our evaluation process considered, among other factors, historical operating results, our three-year cumulative earnings position, projections of future sustained profitability and the duration of statutory carryforward periods. As of September 30, 2017, the Company determined that a valuation allowance was no longer required against its federal net deferred tax assets for the portion that will be realized. As a result, the Company released $766.2 million of its total valuation allowance for three months ended September 30, 2017 due to the positive evidence outweighing the negative evidence thereby allowing the Company to achieve the “more-likely-than-not” realization standard. This reversal is reflected in our income tax benefit in the accompanying condensed consolidated statements of operations. When a change in valuation allowance is recognized during an interim period, a portion of the valuation allowance to be reversed must be allocated to the remaining interim periods. The Company continues to maintain a valuation allowance of $77.1 million as of September 30, 2017 for certain state filing groups, where it continues to be in a cumulative three-year loss position. The most significant positive evidence that led to the reversal of the valuation allowance during this interim period includes the following:
| · |  | Achievement and sustained growth in our three-year cumulative pretax earnings. During the fourth quarter of 2016, we emerged from a three-year cumulative pretax loss position, generating a near break-even cumulative amount of pretax income. This cumulative pretax income increased to $76.6 million for the three months ended September 30, 2017 and is expected to rise substantially at year end since the Company had recorded a $161.5 million pretax loss in the fourth quarter of 2014 due to impairment charges of $155.3 million in that period.
| · |  | Substantial pretax income in seven of the last eight quarters with the only loss reported eight quarters ago.
| · |  | Lack of significant goodwill and intangible asset impairment charges expected in 2017. The Company had experienced significant impairment charges in connection with the spin-off of its real estate assets to Gaming Leisure Properties, Inc. in November 2013. The Company recorded impairment charges totaling $40.0 million, $159.9 million and $798.3 million for the years ended December 31, 2015, 2014 and 2013, respectively. There were no impairments recorded in 2016 and for the nine months ended September 30, 2017, the Company recorded impairments of $29.9 million.
In September 2016, the Company accepted a settlement with the U.S. and Canada competent authorities resolving a transfer pricing issue that arose under audit of tax years 2004 – 2009 as well as the anticipated adjustments for tax years 2010 – 2014. During the three months ended September 30, 2017, the Company received $29.7 million from the Canadian Revenue Agency. The Company will continue to update the estimated income tax receivable balance related to this settlement based on new information provided by the taxing jurisdictions. As such, the Company has recorded a discrete income tax benefit for the three and nine months ended September 30, 2017 of $1.3 million and $5.1 million, respectively.”

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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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