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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES On December 22, 2017, the United States enacted significant changes to the U.S. tax law following the passage and signing of H.R.1, “An Act to Provide the Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018” (the “Act”) (previously known as “The Tax Cuts and Jobs Act”). Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. We have calculated our best estimate of the impact of the Act in our year-end income tax provision in accordance with our understanding of the Act and guidance available as of the date of this filing and as result have recorded income tax expense of $54.1 million in the fourth quarter of 2017, the period in which the legislation was enacted. This income tax expense was fully offset by a decrease in the valuation allowance previously recorded on our net deferred tax assets. As such, the Act resulted in no net tax expense. The provisional amount related to the remeasurement of certain deferred tax assets and liabilities, based on the rates at which they are expected to reverse in the future was $49.6 million, offset by a corresponding decrease in our valuation allowance. The provisional amount related to the one-time transition tax was $4.5 million, offset by a corresponding decrease in our valuation allowance. On December 22, 2017, Staff Accounting Bulletin 118 (“SAB 118”) was issued to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. We have made reasonable estimates of the effects and recorded provisional amounts in our financial statement as of December 31, 2017. However, we are still analyzing certain aspects of the Act and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. We have not yet completed our calculation of the total post-1986 E&P for these foreign subsidiaries. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may change when we finalize the calculation of post-1986 foreign E&P previously deferred from US federal taxation and finalize the amounts held in cash or other specified assets. In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income ("GILTI") provisions of the Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that either accounting for deferred taxes related to GILTI inclusions or to treat any taxes on GILTI inclusions as period cost are both acceptable methods subject to an accounting policy election. A provisional estimate could not be made as we have not yet completed our assessment or elected an accounting policy to either recognize deferred taxes for basis differences expected to reverse as GILTI or to record GILTI as period costs if and when incurred. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any remaining undistributed foreign earnings not subject to the transition tax and additional outside basis difference in these entities (i.e., basis difference in excess of that subject to the one-time transition tax) is not practicable. The income tax provision (benefit) attributable to continuing operations for the years ended December 31, 2017, 2016, and 2015, consists of the following:
|  | Year Ended December 31,
|  | 2017 |  | 2016 |  | 2015
|  | (In Thousands)
Current |  |  |  |  |  |  |  |  |
Federal |  | $ | (651 | ) |  | $ | — |  |  | $ | (1,310 | )
State |  | 799 |  |  | 783 |  |  | 2,022 |
Foreign |  | 4,100 |  |  | 3,328 |  |  | 7,371 |
|  | 4,248 |  |  | 4,111 |  |  | 8,083 |
Deferred |  |  |  |  |  |  |  |  |
Federal |  | 686 |  |  | — |  |  | 191 |
State |  | (648 | ) |  | (610 | ) |  | (1,613 | )
Foreign |  | (3,086 | ) |  | (1,198 | ) |  | 1,043 |
|  | (3,048 | ) |  | (1,808 | ) |  | (379 | )
Total tax provision (benefit) |  | $ | 1,200 |  |  | $ | 2,303 |  |  | $ | 7,704 |
A reconciliation of the provision (benefit) for income taxes attributable to continuing operations, computed by applying the federal statutory rate to income (loss) before income taxes and the reported income taxes, is as follows:
|  | Year Ended December 31,
|  | 2017 |  | 2016 |  | 2015
|  | (In Thousands)
Income tax provision (benefit) computed at statutory federal income tax rates |  | $ | (21,344 | ) |  | $ | (82,982 | ) |  | $ | (70,617 | )
State income taxes (net of federal benefit) |  | 1,664 |  |  | (2,960 | ) |  | (608 | )
Nondeductible meals and entertainment |  | 472 |  |  | 419 |  |  | 909 |
Impact of international operations |  | 10,860 |  |  | 7,567 |  |  | (1,880 | )
Impact of U.S. tax law change |  | 54,092 |  |  | — |  |  | — |
Goodwill impairments |  | — |  |  | 12,990 |  |  | 20,412 |
Impact of noncontrolling interest |  | 5,151 |  |  | 2,247 |  |  | 1,411 |
Valuation allowance |  | (55,850 | ) |  | 58,846 |  |  | 55,392 |
Other |  | 6,155 |  |  | 6,176 |  |  | 2,685 |
Total tax provision (benefit) |  | $ | 1,200 |  |  | $ | 2,303 |  |  | $ | 7,704 |
Other reconciling items for 2017 include $6.2 million related to a cumulative correcting cost allocation adjustment between CCLP U.S. subsidiary entities from prior years, the net impact from which is considered immaterial. Income (loss) before taxes and discontinued operations includes the following components:
|  | Year Ended December 31,
|  | 2017 |  | 2016 |  | 2015
|  | (In Thousands)
Domestic |  | $ | (46,356 | ) |  | $ | (235,394 | ) |  | $ | (195,815 | )
International |  | (14,627 | ) |  | (1,696 | ) |  | (5,948 | )
Total |  | $ | (60,983 | ) |  | $ | (237,090 | ) |  | $ | (201,763 | )
A reconciliation of the beginning and ending amount of our gross unrecognized tax benefit liability is as follows:
|  | Year Ended December 31,
|  | 2017 |  | 2016 |  | 2015
|  | (In Thousands)
Gross unrecognized tax benefits at beginning of period |  | $ | 1,593 |  |  | $ | 1,955 |  |  | $ | 1,959 |
Decreases in tax positions for prior years |  | — |  |  | — |  |  | — |
Increases in tax positions for current year |  | — |  |  | 16 |  |  | 120 |
Lapse in statute of limitations |  | (327 | ) |  | (378 | ) |  | (124 | )
Gross unrecognized tax benefits at end of period |  | $ | 1,266 |  |  | $ | 1,593 |  |  | $ | 1,955 |
We recognize interest and penalties related to uncertain tax positions in income tax expense. During the years ended December 31, 2017, 2016, and 2015, we recognized $(0.2) million, $(0.1) million, and $0.3 million, respectively, of interest and penalties to the provision for income tax. As of December 31, 2017 and 2016, we had $2.0 million and $2.3 million, respectively, of accrued potential interest and penalties associated with these uncertain tax positions. The total amount of unrecognized tax benefits that would affect our effective tax rate if recognized is $3.1 million and $3.2 million as of December 31, 2017 and 2016, respectively. We do not expect a significant change to the unrecognized tax benefits during the next twelve months. We file tax returns in the U.S. and in various state, local, and non-U.S. jurisdictions. The following table summarizes the earliest tax years that remain subject to examination by taxing authorities in any major jurisdiction in which we operate:
Jurisdiction | Earliest Open Tax Period
United States – Federal | 2012
United States – State and Local | 2002
Non-U.S. jurisdictions | 2011
We use the liability method for reporting income taxes, under which current and deferred tax assets and liabilities are recorded in accordance with enacted tax laws and rates. Under this method, at the end of each period, the amounts of deferred tax assets and liabilities are determined using the tax rate expected to be in effect when the taxes are actually paid or recovered. We establish a valuation allowance to reduce the deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. We considered all available evidence, both positive and negative, in determining whether, based on the weight of that evidence, a valuation allowance is needed for some portion or all of our deferred tax assets. In determining the need for a valuation allowance on our deferred tax assets we placed greater weight on recent and objectively verifiable current information, as compared to more forward-looking information that is used in valuating other assets on the balance sheet. While we have considered taxable income in prior carryback years, future reversals of existing taxable temporary differences, future taxable income, and tax planning strategies in assessing the need for the valuation allowance, there can be no guarantee that we will be able to realize all of our deferred tax assets. Significant components of our deferred tax assets and liabilities as of December 31, 2017 and 2016, are as follows:
|  | December 31,
|  | 2017 |  | 2016
|  | (In Thousands)
Net operating losses |  | $ | 88,025 |  |  | $ | 126,141 |
Foreign tax credits and alternative minimum tax credits |  | 19,346 |  |  | 28,929 |
Accruals |  | 24,577 |  |  | 31,835 |
Depreciation and amortization for book in excess of tax expense |  | 40,979 |  |  | 67,183 |
All other |  | 3,813 |  |  | 8,932 |
Total deferred tax assets |  | 176,740 |  |  | 263,020 |
Valuation allowance |  | (130,453 | ) |  | (185,275 | )
Net deferred tax assets |  | $ | 46,287 |  |  | $ | 77,745 |
|  | December 31,
|  | 2017 |  | 2016
|  | (In Thousands)
Depreciation and amortization for tax in excess of book expense |  | $ | 48,618 |  |  | $ | 83,311 |
All other |  | 2,064 |  |  | 1,702 |
Total deferred tax liability |  | 50,682 |  |  | 85,013 |
Net deferred tax liability |  | $ | 4,395 |  |  | $ | 7,268 |
We believe that it is more likely than not we will not realize all the tax benefits of the deferred tax assets within the allowable carryforward period. Therefore, an appropriate valuation allowance has been provided. The valuation allowance as of December 31, 2017 and 2016 primarily relates to federal deferred tax assets. The increase (decrease) in the valuation allowance during the years ended December 31, 2017, 2016, and 2015, were $(54.8) million, $58.6 million, and $53.0 million, respectively. At December 31, 2017, we had federal, state, and foreign net operating loss carryforwards/carrybacks equal to approximately $62.3 million, 12.8 million, and 12.9 million, respectively. In those countries and states in which net operating losses are subject to an expiration period, our loss carryforwards, if not utilized, will expire at various dates from 2017 through 2036. At December 31, 2017, we had $19.1 million of foreign tax credits available to offset future payment of federal income taxes. The foreign tax credits expire in varying amounts from 2020 through 2025. Utilization of the net operating loss and credit carryforwards may be subject to a significant annual limitation due to ownership changes that have occurred previously or could occur in the future provided by Section 382 of the Internal Revenue Code.

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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 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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