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INCOME TAXES | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES We account for income taxes in accordance with ASC 740, Income Taxes. This standard requires the recognition of deferred tax assets and liabilities for the tax effect of temporary differences between the financial statement and tax basis of recorded assets and liabilities at enacted tax rates in effect when the related taxes are expected to be settled or realized. We recognize income taxes in each of the tax jurisdictions where we conduct business. 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. A summary of the provision for income taxes is as follows (in thousands):
|  | Year Ended December 31,
|  | 2018 |  | 2017 |  | 2016
Current portion of income tax expense (benefit): |  |  |  |  |  |
Federal |  | $ | 23 |  |  | $ | (2,793 | ) |  | $ | (1,365 | )
State |  | 85 |  |  | 10 |  |  | 3 |
Deferred portion of income tax expense: |  |  |  |  |  |
Federal |  | — |  |  | — |  |  | — |
State |  | — |  |  | — |  |  | — |
Total income tax expense (benefit) |  | $ | 108 |  |  | $ | (2,783 | ) |  | $ | (1,362 | )
A reconciliation of the federal statutory income tax rate of 21% for 2018 and 35% for 2017 and 2016 to our effective rate is as follows (in thousands, except percentages):
|  | Year Ended December 31,
|  | 2018 |  | 2017 |  | 2016
Federal taxes at statutory rate |  | $ | 2,497 |  |  | $ | (8,873 | ) |  | $ | (22,941 | )
Add: |  |  |  |  |  |  |  |  |
State taxes, net of federal benefit |  | 1,663 |  |  | (1,414 | ) |  | (4,982 | )
Change in valuation allowance |  | (3,330 | ) |  | (104,710 | ) |  | 24,522 |
Change in federal and state tax rates |  | 634 |  |  | 115,545 |  |  | — |
Percentage depletion |  | (656 | ) |  | (598 | ) |  | (552 | )
Other |  | (700 | ) |  | (2,733 | ) |  | 2,591 |
Net expense (benefit) as calculated |  | $ | 108 |  |  | $ | (2,783 | ) |  | $ | (1,362 | )
Effective tax rate |  | 0.9 | % |  | 11.0 | % |  | 2.1 | %
During the year ended December 31, 2018, our effective tax rate was impacted by the decrease in our valuation allowance of $3.3 million. During the year ended December 31, 2017, our effective tax rate was impacted by the decrease in our expected future rate at which our deferred tax assets will reverse due to newly enacted federal tax legislation, which reduced the value of our deferred tax assets by $115.5 million. Since we have a full valuation allowance against our deferred tax assets, a corresponding decrease in our valuation allowance was also required. The net decrease in our valuation allowance was $104.7 million for the year ended December 31, 2017. Finally, our effective tax rate was impacted by a benefit of $2.7 million related to our ability to monetize existing alternative minimum tax credits through a carryback as well as an election available to taxpayers in 2017. During the year ended December 31, 2016, our effective tax rate was impacted by the increase in our valuation allowance of $24.5 million, as well as an election to monetize a portion of our existing alternative minimum tax credits in the amount of $1.4 million. As of December 31, 2018, and 2017, we had gross deferred tax assets of $218.4 million and $221.7 million, respectively. During the year ended December 31, 2018, our deferred tax assets decreased primarily due to varying business conditions for normal business transactions and operations as well as changes to state tax rates and apportionment laws. Included in gross deferred tax assets as of December 31, 2018 were approximately $240.0 million of federal net operating loss carryforwards, which expire beginning in 2033, and approximately $296.5 million of state net operating loss carry forwards, the majority of which begin to expire in 2033. Gross deferred tax assets also include $1.9 million of federal research and development credits which begin to expire in 2031. The federal loss carryforward could be subject to examination by the tax authorities within three years after the carryforward is utilized, while the state net operating loss carry forwards could be subject to examination by the tax authorities generally within three and four years after the carry forward is utilized, depending on jurisdiction. Significant components of our deferred tax assets and liabilities were as follows (in thousands):
|  | December 31,
|  | 2018 |  | 2017
Deferred tax assets (liabilities): |  |  |  |
Property, plant, equipment and mineral properties, net |  | $ | 138,855 |  |  | $ | 139,656 |
Federal and state net operating loss carryforwards |  | 65,779 |  |  | 68,733 |
Other |  | 2,888 |  |  | 5,976 |
Asset retirement obligation |  | 5,950 |  |  | 5,472 |
R&D credits |  | 1,870 |  |  | 1,870 |
Deferred revenue |  | 3,035 |  |  | — |
Total deferred tax assets |  | 218,377 |  |  | 221,707 |
Valuation allowance |  | (218,377 | ) |  | (221,707 | )
Deferred tax asset, net |  | $ | — |  |  | $ | — |
In assessing the need for a valuation allowance, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. We evaluate our ability to realize the tax benefits associated with deferred tax assets by analyzing the relative impact of all the available positive and negative evidence regarding our forecasted taxable income using both historical and projected future operating results, the reversal of existing taxable temporary differences, and the availability of tax planning strategies. The ultimate realization of deferred tax assets is dependent upon the generation of certain types of future taxable income during the periods in which those temporary differences become deductible. In making this assessment, we consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. As of December 31, 2018, and 2017, we have a full valuation allowance against our deferred tax assets because we do not believe it is more likely than not that we will fully realize the benefit of the deferred tax assets. During 2018, our valuation allowance decreased $3.3 million. The decrease was mainly due to changes in operations in the various states we conduct business which decreased our expected future effective tax rate at which our deferred tax assets will reverse. Our deferred tax asset, net of the valuation allowance, at both December 31, 2018, and 2017, is zero. The estimated statutory income tax rates that are applied to our current and deferred income tax calculations are impacted most significantly by the tax jurisdictions in which we conduct business. Changing business conditions for normal business transactions and operations, as well as changes to state tax rates and apportionment laws, potentially alter the apportionment of income among the states for income tax purposes. These changes to apportionment laws result in changes in the calculation of our current and deferred income taxes, including the valuation of our deferred tax assets and liabilities. The effects of any such changes are recorded in the period of the adjustment. Such adjustments can increase or decrease the net deferred tax asset on the balance sheet and impact the corresponding deferred tax benefit or deferred tax expense on the statement of operations. A decrease of our state tax rate decreases the value of its deferred tax asset, resulting in additional deferred tax expense being recorded in the income statement. Conversely, an increase in our state income tax rate would increase the value of the deferred tax asset, resulting in an increase in our deferred tax benefit. Because of the magnitude of the temporary differences between our book and tax basis in the assets, relatively small changes in the state tax rate may have a pronounced impact on the value of our net deferred tax asset. Each quarter we evaluate the need for a liability for uncertain tax positions. At December 31, 2018, and 2017, there were no items that required disclosure in accordance with FASB guidance on accounting for uncertainty in income taxes. We operate, and accordingly file income tax returns, in the U.S. federal jurisdiction and various U.S. state jurisdictions. With few exceptions, we are no longer subject to income tax examinations for years prior to 2015. The Tax Cuts and Jobs Act was enacted on December 22, 2017. Significant changes to the Internal Revenue Code including reducing the U.S. corporate tax rate were included in the legislation. As a result, the reduced tax rate caused a $115.5 million decrease to our deferred tax asset and related valuation allowance. As the deferred tax asset is subject to a full valuation allowance, the change in rates had no financial statement impact.

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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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