Income Taxes

Loss before income tax expense (benefit) was comprised of the following for the periods indicated (in thousands):



	Year Ended December 31,
	2018			2017			2016

United States	$	(85,342	)	$	(167,908	)	$	(128,396	)
Foreign	(8,341		)	81,369			(53,326		)
Loss before income tax expense (benefit)	$	(93,683	)	$	(86,539	)	$	(181,722	)

Income taxes have been provided for based upon the tax laws and rates in the countries in which operations are conducted and income is earned. Components of income tax expense (benefit) consist of the following for the periods indicated (in thousands):



	Year Ended December 31,
	2018			2017			2016
Current
U.S. federal	$	—		$	—		$	(13,389	)
U.S. state and local	7			(15		)	379
Foreign	11,677			10,516			14,903
Total current	11,684			10,501			1,893

Deferred
U.S. federal	—			56,621			(25,838		)
U.S. state and local	—			2,420			(1,512		)
Foreign	(14,634		)	3,376			(186		)
Total deferred	(14,634		)	62,417			(27,536		)
Total income tax expense (benefit)	$	(2,950	)	$	72,918		$	(25,643	)

For the year ending December 31, 2017, the Company reported, on a provisional basis, the tax impacts resulting from the enactment of the Tax Cuts and Jobs Act (“Tax Act”) on December 22, 2017. During 2018, the Company completed its analysis of the impacts of the Tax Act during the measurement period without further adjustment. The Company has completed the accounting for the impacts of the Tax Act, although adjustments may be necessary in future periods due to technical corrections and/or regulatory guidance that may be issued by the Internal Revenue Service.

Foreign taxes were incurred in the following regions for the periods indicated (in thousands):



	Year Ended December 31,
	2018			2017		2016

Latin America	$	1,261		$	5,469	$	1,159
West Africa	2,692			3,243		3,687
Middle East	2,249			1,633		1,880
Europe	461			1,348		5,132
Asia Pacific	922			1,388		1,364
Other	(10,542		)	812		1,495
Total foreign income tax expense (benefit)	$	(2,957	)	$	13,893	$	14,717

A reconciliation of the differences between the income tax provision computed at the 21% U.S. statutory rate in effect at December 31, 2018 and the reported provision for income taxes for the periods indicated is as follows (in thousands):



	Year Ended December 31,
	2018			2017			2016

Income tax expense (benefit) at statutory rate	$	(19,673	)	$	(30,289	)	$	(63,603	)
Branch profits tax	(4,267		)	(4,871		)	(3,805		)
State taxes, net of federal benefit	(27		)	2,405			(674		)
Restricted stock units tax shortfall	1,025			1,651			2,758
Taxes on foreign earnings at less than the U.S. statutory rate	13,095			(22,464		)	30,737
Effect of tax rate change	(2,929		)	23,843			—
Effect of moving activity to higher tax rate jurisdiction	(14,620		)	—			—
Management fee charged to international operations	1,515			1,213			—
Tax effect of TRA derecognition	—			46,874			—
Establishment of valuation allowances	22,892			51,911			2,644
Return-to-provision adjustments	(521		)	3,551			(1,130		)
Noncontrolling interest	—			—			7,367
Other	560			(906		)	63
Total income tax expense (benefit)	$	(2,950	)	$	72,918		$	(25,643	)

A reconciliation using the Netherlands statutory rate was not provided as there are no significant operations in the Netherlands.

Deferred tax assets and liabilities are recorded for the anticipated future tax effects of temporary differences between the financial statement basis and tax basis of our assets and liabilities and are measured using the tax rates and laws expected to be in effect when the differences are projected to reverse. A valuation allowance is recorded when it is not more likely than not that some or all the benefit from the deferred tax asset will be realized. Significant components of deferred tax assets and liabilities are as follows (in thousands):



	December 31,
	2018			2017
Deferred tax assets
Foreign net operating loss	$	13,290		$	13,023
U.S. net operating loss	76,349			52,289
Research and development credit	609			297
TRA	—			566
Intangibles	5,933			5,935
Inventory	2,350			1,488
Property and equipment	14,621			—
Investment in partnership	23,931			20,248
Other	773			419
Valuation allowance	(84,972		)	(60,524		)
Total deferred tax assets	52,884			33,741

Deferred tax liabilities
Investment in partnership	(27,352		)	(23,594		)
Property and equipment	(3,652		)	(4,293		)
Goodwill	(7,259		)	(5,854		)
Other	(221		)	(229		)
Total deferred liabilities	(38,484		)	(33,970		)

Net deferred tax assets (liabilities)	$	14,400		$	(229	)

As of December 31, 2018, we have income tax net operating loss (“NOL”) carryforwards related to both our U.S. and foreign operations of approximately $326.7 million. In addition, we have research and development tax credit carryforwards of approximately $0.6 million. The ultimate utilization of the NOLs and research and development credits depend on the ability to generate sufficient taxable income in the appropriate tax jurisdiction. These tax attributes expire as follows:



Year of Expiration	U.S. NOLs		Foreign NOLs		R&D Credits

2019 - 2023	$	—	$	9,022	$	—
2024 - 2028	—		1,901		—
2028 - 2038	194,381		208		609
Does not expire	78,315		42,852		—
	$	272,696	$	53,983	$	609

The valuation allowance increased from $60.5 million to $85.0 million during 2018 as a result of accumulated tax losses in both the U.S. and various foreign tax jurisdictions. We evaluated all available evidence and determined that it is more likely than not that these losses will not be realized.

It is our intention that all cash and earnings of our subsidiaries as of December 31, 2018 are permanently reinvested and will be used to meet operating cash flow needs. Existing plans do not demonstrate a need to repatriate foreign cash to fund parent company activity, however, should we determine that parent company funding is required, we estimate that any such cash needs may be met without adverse tax consequences.

As of December 31, 2018 and 2017, we had total gross unrecognized tax benefits of $0.3 million and $0.2 million, respectively. Substantially all of the uncertain tax positions, if recognized in the future, would impact our effective tax rate. We have elected to classify interest and penalties incurred on income taxes as income tax expense.

We file income tax returns in the U.S. and various international tax jurisdictions. As of December 31, 2018, our U.S. tax returns remain open to examination for the tax years 2017 through 2018, and the major foreign taxing jurisdictions to which we are subject to tax are open to examination for the tax years 2010 through 2018.