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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | 8. Income Taxes In December 2017, the President of the United States signed into law the Tax Cuts and Jobs Act of 2017 (the “Tax Cut Act”), making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a federal corporate tax rate of 21%, additional limitations on executive compensation, and limitations on the deductibility of interest. The FASB issued ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 to address the application of 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 Tax Cut Act. In 2017 and the first nine months of 2018, we recorded provisional amounts for certain enactment-date effects of the Tax Cut Act by applying the guidance in SAB 118 because we had not yet completed our enactment-date accounting for these effects. In 2018 and 2017, we recorded tax expense related to these effects including the decrease in the federal corporate tax rate, additional limitations on executive compensation, and limitations on the deductibility of interest. During the fourth quarter of 2018, we completed the accounting for tax reform and there was no adjustment to provisional amounts recorded. Provision (benefit) for income taxes from continuing operations are as follows:
|  | 2018 |  |  | 2017 |  |  | 2016 |
|  | (In Thousands) |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 11 |  |  | $ | 67 |  |  | $ | 46 |
State |  |  | (96 | ) |  |  | (381 | ) |  |  | 11 |
Total Current |  | $ | (85 | ) |  | $ | (314 | ) |  | $ | 57 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 1,415 |  |  | $ | (50,084 | ) |  | $ | (46,926 | )
State |  |  | 410 |  |  |  | 9,639 |  |  |  | 4,913 |
Total Deferred |  | $ | 1,825 |  |  | $ | (40,445 | ) |  | $ | (42,013 | )
Provision (benefit) for income taxes |  | $ | 1,740 |  |  | $ | (40,759 | ) |  | $ | (41,956 | )
The current provision for federal income taxes shown above includes regular federal income tax after the consideration of permanent and temporary differences between income for GAAP and tax purposes. The current provision (benefit) for state income taxes includes regular state income tax and provisions for uncertain income tax positions, and other similar adjustments. The deferred tax provision (benefit) results from the recognition of changes in our prior year deferred tax assets and liabilities, and the utilization of state NOL carryforwards and other temporary differences. We reduce income tax expense for tax credits in the year they arise and are earned. At December 31, 2018, our gross amount of tax credits available to offset state income taxes was not material. Most of these tax credits do not expire and carryforward indefinitely. The gross amount of federal tax credits was $8.1 million. These credits carryforward for 20 years and begin expiring in 2034. We utilized approximately $3.4 million, which includes the impact of changes in tax law, and $0.4 million of state NOL carryforwards to reduce tax liabilities in 2018 and 2016, respectively, (none in 2017). At December 31, 2018, we have remaining federal and state tax NOL carryforwards of $577.3 million and $667.9 million, respectively. The federal NOL carryforwards begin expiring in 2033 and the state NOL carryforwards began expiring in 2018. 8. Income Taxes (continued) We considered both positive and negative evidence in our determination of the need for valuation allowances for the deferred tax assets associated with federal and state NOLs and federal credits and in conjunction with the IRC Section 382 limitation. Information evaluated includes our financial position and results of operations for the current and preceding years, the availability of deferred tax liabilities and tax carrybacks, as well as an evaluation of currently available information about future years. In the second quarter of 2018, we established a valuation allowance on a portion of our federal deferred tax assets. Valuation allowances are reflective of our quarterly analysis of the four sources of taxable income, including the calculation of the reversal of existing tax assets and liabilities, the impact of the recent financing activities and our results of operations. Based on our analysis, we currently believe that it is more-likely-than-not that a portion of our federal deferred tax assets will not be able to be utilized and the valuation allowance recorded for 2018 is approximately $14.6 million. For 2018, 2017 and 2016, we determined it was more-likely-than-not that approximately $608.9 million, $536.0 million and $312.3 million, respectively, of the state deferred tax assets would not be able to be utilized before expiration and a valuation allowance was maintained for the deferred tax assets associated with these carryforwards, net of federal benefit, of approximately $31.0 million and $26.9 million at December 31, 2018 and 2017, respectively. This includes a reversal of approximately $2.3 million of valuation allowance related to tax law changes in 2018. Deferred tax assets and liabilities include temporary differences and carryforwards as follows:
|  | December 31, |
|  | 2018 |  |  | 2017 |
|  | (In Thousands) |
Deferred compensation |  | $ | 2,637 |  |  | $ | 2,393 |
Other accrued liabilities |  |  | 1,579 |  |  |  | 1,964 |
Interest expense carryforward |  |  | 11,267 |  |  |  | — |
Net operating loss |  |  | 154,914 |  |  |  | 142,950 |
Other |  |  | 12,581 |  |  |  | 15,933 |
Less valuation allowance on deferred tax assets |  |  | (45,625 | ) |  |  | (26,920 | )
Total deferred tax assets |  | $ | 137,353 |  |  | $ | 136,320 |
Property, plant and equipment |  |  | (191,369 | ) |  |  | (186,561 | )
Prepaid and other insurance reserves |  |  | (2,596 | ) |  |  | (2,561 | )
Other |  |  | — |  |  |  | (1,985 | )
Total deferred tax liabilities |  | $ | (193,965 | ) |  | $ | (191,107 | )
Net deferred tax liabilities |  | $ | (56,612 | ) |  | $ | (54,787 | )
All of our loss before taxes relates to domestic operations. Detailed below are the differences between the amount of the provision (benefit) for income taxes and the amount which would result from the application of the federal statutory rate to “Loss from continuing operations before provision (benefit) for income taxes”.
|  | 2018 |  |  | 2017 |  |  | 2016 |
|  | (In Thousands) |
Benefit for income taxes at federal statutory rate |  | $ | (14,802 | ) |  | $ | (24,868 | ) |  | $ | (45,531 | )
State current and deferred income tax benefit |  |  | (4,089 | ) |  |  | (2,699 | ) |  |  | (4,452 | )
Valuation allowance - Federal |  |  | 14,604 |  |  |  | — |  |  |  | — |
Valuation allowance - State |  |  | 4,112 |  |  |  | 7,651 |  |  |  | 11,855 |
Tax reform |  |  | — |  |  |  | (22,988 | ) |  |  | — |
Energy credit |  |  | — |  |  |  | — |  |  |  | (888 | )
Other |  |  | 1,915 |  |  |  | 2,145 |  |  |  | (2,940 | )
Provision (benefit) for income taxes |  | $ | 1,740 |  |  | $ | (40,759 | ) |  | $ | (41,956 | )
8. Income Taxes (continued) A reconciliation of the beginning and ending amount of uncertain tax positions is as follows:
|  | 2018 |  |  | 2017 |  |  | 2016 |
|  | (In Thousands) |
Balance at beginning of year |  | $ | 618 |  |  | $ | 657 |  |  | $ | 259 |
Additions based on tax positions related to the current year |  |  | — |  |  |  | 11 |  |  |  | 454 |
Additions based on tax positions of prior years |  |  | — |  |  |  | — |  |  |  | 4 |
Reductions for tax positions of prior years |  |  | (41 | ) |  |  | (50 | ) |  |  | (60 | )
Settlements |  |  | — |  |  |  | — |  |  |  | — |
Balance at end of year |  | $ | 577 |  |  | $ | 618 |  |  | $ | 657 |
We expect that the amount of unrecognized tax benefits may change as the result of ongoing operations, the outcomes of audits, and the expiration of statute of limitations. This change is not expected to have a significant effect on our results of operations or financial condition. For 2018, 2017, and 2016, if recognized, the effect on the effective tax rate from unrecognized tax benefits would be insignificant. We record interest related to unrecognized tax positions in interest expense and penalties in operating other expense. We recognized $0.1 million of interest and penalties associated with unrecognized tax benefits in 2017 (minimal amounts in 2018 and 2016). At December 31, 2018 and 2017, approximately $0.2 million, respectively is accrued for interest and penalties. LSB and certain of its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the 2015-2018 years remain open for all purposes of examination by the U.S. Internal Revenue Service (“IRS”) and other major tax jurisdictions. During 2018, the IRS concluded their examination of our 2015 tax return and there are no changes to our financial position, results of operations or cash flow resulting from the audit.

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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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