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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Note 19. INCOME TAXES Section 7704 of the Internal Revenue Code provides that publicly traded partnerships are, as a general rule, taxed as corporations. However, an exception, referred to as the “Qualifying Income Exception,” exists under Section 7704(c) with respect to publicly traded partnerships of which 90% or more of the gross income for every taxable year consists of “qualifying income.” Substantially all of the Partnership’s income is “qualifying income” for federal income tax purposes and, therefore, is not subject to federal income taxes at the partnership level. Accordingly, no provision has been made for income taxes on the qualifying income in the Partnership’s financial statements. Net income for financial statement purposes may differ significantly from taxable income reportable to unitholders as a result of differences between the tax basis and financial reporting basis of assets and liabilities and the taxable income allocation requirements under the Partnership Agreement. Individual unitholders have different investment basis depending upon the timing and price at which they acquired their common units. Further, each unitholder’s tax accounting, which is partially dependent upon the unitholder’s tax position, differs from the accounting followed in the Partnership’s financial statements. Accordingly, the aggregate difference in the basis of the Partnership’s net assets for financial and tax reporting purposes cannot be readily determined because information regarding each unitholder’s tax attributes in the Partnership is not available to the Partnership. As a limited partnership, we are not subject to federal and state income taxes. However, our corporate subsidiaries are subject to income taxes. The Partnership is subject to the statutory requirement that non-qualifying income, as defined by the Internal Revenue Code, cannot exceed 10% of total gross income for the calendar year. If non-qualifying income exceeds this statutory limit, we would be taxed as a corporation. The Partnership’s non-qualifying income did not exceed the statutory limit in any period presented. Certain activities that generate non-qualifying income are conducted through LGWS. LGWS is a tax paying corporate subsidiary of ours that is subject to federal and state income taxes. Current and deferred income taxes are recognized on the earnings of LGWS. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Partnership calculates its current and deferred tax provision based on estimates and assumptions that could differ from actual results reflected in income tax returns filed in subsequent years. Adjustments based on filed returns are recorded when identified. The Tax Cuts and Jobs Act made changes that affect us including (1) reducing the federal corporate income tax rate to 21 percent beginning January 1, 2018, and (2) providing for the immediate expensing for tax purposes for certain qualified depreciable assets placed in service after September 27, 2017. As a result of the rate change, we recognized a net tax benefit of $13.2 million in 2017 due to the reduction of our net deferred tax liability. Components of income tax expense related to net income were as follows (in thousands):
|  | For the Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Current |  |  |  |  |  |  |  |  |  |  |  |
U.S. federal |  | $ | (4,865 | ) |  | $ | 1,117 |  |  | $ | 210 |
U.S. state |  |  | 66 |  |  |  | 411 |  |  |  | 406 |
Total current |  |  | (4,799 | ) |  |  | 1,528 |  |  |  | 616 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
U.S. federal |  |  | 4,895 |  |  |  | (2,737 | ) |  |  | (16,064 | )
U.S. state |  |  | (1,326 | ) |  |  | (1,524 | ) |  |  | (2,789 | )
Total deferred |  |  | 3,569 |  |  |  | (4,261 | ) |  |  | (18,853 | )
Income tax benefit |  | $ | (1,230 | ) |  | $ | (2,733 | ) |  | $ | (18,237 | )
The difference between the actual income tax provision and income taxes computed by applying the U.S. federal statutory rate to earnings (losses) before income taxes is attributable to the following (in thousands):
|  | For the Year Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Consolidated income from continuing operations before income taxes - all domestic |  | $ | 16,846 |  |  | $ | 2,513 |  |  | $ | 4,939 |
Income from continuing operations before income taxes of non-taxable entities |  |  | (16,902 | ) |  |  | (8,881 | ) |  |  | (7,769 | )
Loss from continuing operations before income taxes of corporate entities |  |  | (56 | ) |  |  | (6,368 | ) |  |  | (2,830 | )
Federal income tax benefit at statutory rate |  |  | (11 | ) |  |  | (1,337 | ) |  |  | (962 | )
Increase (decrease) due to: |  |  |  |  |  |  |  |  |  |  |  |
Nondeductible expenses |  |  | 54 |  |  |  | 132 |  |  |  | 384 |
Basis difference of acquired assets |  |  | — |  |  |  | (648 | ) |  |  | — |
Tax on gains not recognized for book income |  |  | — |  |  |  | — |  |  |  | 112 |
Change in valuation allowance |  |  | — |  |  |  | — |  |  |  | (3,713 | )
State income taxes, net of federal income tax benefit |  |  | (995 | ) |  |  | (880 | ) |  |  | (878 | )
Non-taxable refund |  |  | (278 | ) |  |  | — |  |  |  | — |
Rate change |  |  | — |  |  |  | — |  |  |  | (13,180 | )
Total income tax benefit |  | $ | (1,230 | ) |  | $ | (2,733 | ) |  | $ | (18,237 | )
The tax effects of significant temporary differences representing deferred income tax assets and liabilities were as follows (in thousands):
|  | December 31, |
|  | 2019 |  |  | 2018 |
Deferred income tax assets: |  |  |  |  |  |  |  |
Deferred rent expense |  | $ | 256 |  |  | $ | 1,167 |
Operating and finance lease obligations |  |  | 26,003 |  |  |  | 13,626 |
Asset retirement obligations |  |  | 8,075 |  |  |  | 7,593 |
Intangible assets |  |  | 8,736 |  |  |  | 1,593 |
Other assets |  |  | 2,535 |  |  |  | 1,280 |
Total deferred income tax assets |  |  | 45,605 |  |  |  | 25,259 |
Deferred income tax liabilities: |  |  |  |  |  |  |  |
Deferred rent income |  |  | 1,249 |  |  |  | 1,081 |
Property and equipment |  |  | 44,095 |  |  |  | 43,873 |
Right-of-use assets |  |  | 19,630 |  |  |  | — |
Other liabilities |  |  | — |  |  |  | 234 |
Total deferred income tax liabilities |  |  | 64,974 |  |  |  | 45,188 |
Net deferred income tax liabilities |  | $ | 19,369 |  |  | $ | 19,929 |
As discussed in Note 2, we removed $5.2 million of deferred tax assets primarily related to our previous sale-leaseback transactions as part of our January 1, 2019 transition adjustment in connection with the adoption of ASC 842. Additionally, we recorded a deferred tax asset relating to operating lease liabilities and a deferred tax liability related to right-of-use assets as a result of this new guidance. As discussed in Note 3, we removed $4.8 million of net deferred tax liabilities and recorded income taxes payable of $5.1 million with respect to the divested sites in connection with the closing of the First Asset Exchange. We also recorded $2.3 million of net deferred tax assets with respect to the acquired sites in connection with the closing of the First Asset Exchange. Also as discussed in Note 3, we removed $0.2 million of net deferred tax assets and recorded income taxes payable of $2.1 million with respect to the divested sites in connection with the closing of the Second Asset Exchange. We also recorded $2.4 million of net deferred tax assets with respect to the acquired sites in connection with the closing of the Second Asset Exchange. Each of these adjustments was recorded through equity based on accounting guidance for transactions between entities under common control. A valuation allowance is required when it is more likely than not that all or a portion of a deferred tax asset will not be realized. All available evidence, both positive and negative, must be considered in determining the need for a valuation allowance. Positive evidence considered in our 2017 assessment included: 1) reversals of taxable temporary differences in future tax years; 2) an observable history of reporting taxable income; 3) projections of future taxable income; 4) feasible and prudent tax planning strategies; and 5) the impact of recently enacted tax reform. Under the Tax Cuts and Jobs Act, among other provisions, any net operating losses generated after 2017 can be carried forward indefinitely. This change, in part, allows for the consideration as a future source of taxable income, reversals of deferred tax liabilities related to indefinite lived liabilities. This income is sufficient to offset the indefinite lived asset generated by the reversals and provides additional positive evidence of future income allowing for the release of the valuation allowance. The release resulted in a tax benefit of $3.7 million in 2017. Changes in the valuation allowance account consisted of the following for 2017 (in thousands):
Balance at December 31, 2016 |  | $ | 5,495 |
Charged to costs and expenses (a) |  |  | (5,495 | )
Balance at December 31, 2017 |  | $ | — |
(a) | Of the 2017 amount charged to costs and expenses, $1.8 million primarily relates to the reduction in the tax rate used to compute the valuation allowance as a result of the Tax Cuts and Jobs Act.
We record an accrual for federal, state and local and uncertain tax positions. The development of these tax positions requires subjective, critical estimates and judgments about tax matters, potential outcomes and timing. Although the outcome of potential tax examinations is uncertain, in management’s opinion, adequate provisions for income taxes have been made for potential liabilities resulting from these reviews. If actual outcomes differ materially from these estimates, they could have a material impact on our financial condition and results of operations. Differences between actual results and assumptions, or changes in assumptions in future periods, are recorded in the period they become known. To the extent additional information becomes available prior to resolution, such accruals are adjusted to reflect probable outcomes. We did not have unrecognized tax benefits at December 31, 2019 or 2018. Our practice is to recognize interest and penalties related to income tax matters in income tax expense. We had no material interest and penalties for 2019, 2018 and 2017. We file income tax returns with the U.S. federal government as well as the many state jurisdictions in which we operate. The statute remains open for tax years 2016 through 2019; therefore, these years remain subject to examination by federal, state and local jurisdiction authorities.

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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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