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Income Taxes | 12 Months Ended
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Aug. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision for income taxes for the years ended August 31, 2017, 2016, and 2015 is as follows:
| 2017 |  | 2016 |  | 2015
| (Dollars in thousands)
Current: |  |  |  |  |
Federal | $ | (1,767 | ) |  | $ | 3,386 |  |  | $ | (47,695 | )
State | 2,695 |  |  | 3,972 |  |  | 3,891 |
Foreign | (7,088 | ) |  | 12,729 |  |  | 1,335 |
| (6,160 | ) |  | 20,087 |  |  | (42,469 | )
Deferred: |  |  |  |  |
Federal | (162,223 | ) |  | (30,758 | ) |  | 29,348 |
State | (15,977 | ) |  | 8,512 |  |  | (2,799 | )
Foreign | 2,285 |  |  | (1,932 | ) |  | 3,755 |
| (175,915 | ) |  | (24,178 | ) |  | 30,304 |
Total | $ | (182,075 | ) |  | $ | (4,091 | ) |  | $ | (12,165 | )
Deferred taxes are comprised of basis differences related to investments, accrued liabilities and certain federal and state tax credits. Domestic income before income taxes was $213.8 million, $490.8 million, and $824.9 million for the years ended August 31, 2017, 2016, and 2015, respectively. Foreign income before taxes was ($268.7) million, ($70.9) million, and ($56.7) million for the years ended August 31, 2017, 2016, and 2015, respectively. Deferred tax assets and liabilities as of August 31, 2017, and 2016, are as follows:
| 2017 |  | 2016
| (Dollars in thousands)
Deferred tax assets: |  |  |  |  |
Accrued expenses | $ | 226,964 |  |  | $ | 87,251 |
Postretirement health care and deferred compensation | 82,682 |  |  | 111,983 |
Tax credit carryforwards | 166,213 |  |  | 143,252 |
Loss carryforwards | 169,724 |  |  | 155,966 |
Nonqualified equity | 152,835 |  |  | 30,168 |
Other | 55,119 |  |  | 30,627 |
Deferred tax assets valuation | (284,716 | ) |  | (194,277 | )
Total deferred tax assets | 568,821 |  |  | 364,970 |
Deferred tax liabilities: |  |  |  |  |
Pension | 31,050 |  |  | 26,516 |
Investments | 129,985 |  |  | 107,716 |
Major maintenance | 2,115 |  |  | 4,970 |
Property, plant and equipment | 712,195 |  |  | 681,160 |
Other | 25,964 |  |  | 29,905 |
Total deferred tax liabilities | 901,309 |  |  | 850,267 |
Net deferred tax liabilities | $ | 332,488 |  |  | $ | 485,297 |
We have total gross loss carry forwards of $689.2 million, of which $458.1 million will expire over periods ranging from fiscal 2018 to fiscal 2039. The remainder will carry forward indefinitely. Based on estimates of future taxable profits and losses in certain foreign tax jurisdictions, we determined that a valuation allowance was required for specific foreign loss carry forwards as of August 31, 2017. If these estimates prove inaccurate, a change in the valuation allowance, up or down, could be required in the future. During fiscal 2017, valuation allowances related to foreign operations increased by $61.9 million due to net operating loss carry forwards and other timing differences. CHS McPherson Refinery Inc. ("CHS McPherson") (formerly known as National Cooperative Refinery Association ("NCRA")) gross state tax credit carry forwards for income tax are approximately $172.9 million and $133.5 million as of August 31, 2017, and 2016, respectively. During the year ended August 31, 2017, the valuation allowance for CHS McPherson increased by $26.6 million, net of federal tax, due to a change in the amount of state tax credits that are estimated to be utilized. The significant increase in state tax credit carry forwards is the result of the CHS McPherson expansion project being placed in service during fiscal 2017, resulting in a corresponding increase in valuation allowance. CHS McPherson's valuation allowance on Kansas state credits is necessary due to the limited amount of Kansas taxable income generated by the combined group on an annual basis. Our alternative minimum tax credit of $8.1 million will not expire. Our general business credits of $60.0 million, comprised primarily of low sulfur diesel credits, will begin to expire on August 31, 2027. Our state tax credits of $172.9 million will begin to expire on August 31, 2018. As of August 31, 2017, and 2016, net deferred tax assets of $0.7 million and $2.5 million were included in other assets, respectively. The reconciliation of the statutory federal income tax rates to the effective tax rates for the years ended August 31, 2017, 2016, and 2015 is as follows:
| 2017 |  | 2016 |  | 2015
Statutory federal income tax rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State and local income taxes, net of federal income tax benefit | 24.7 |  |  | 0.4 |  |  | (0.5 | )
Patronage earnings | 192.0 |  |  | (23.2 | ) |  | (29.0 | )
Domestic production activities deduction | 64.7 |  |  | (13.2 | ) |  | (5.6 | )
Export activities at rates other than the U.S. statutory rate | 145.3 |  |  | 1.5 |  |  | (0.2 | )
Valuation allowance | (182.3 | ) |  | 19.6 |  |  | (0.1 | )
Tax credits | 45.8 |  |  | (11.8 | ) |  | (0.8 | )
Crack spread contingency | 9.6 |  |  | (5.0 | ) |  | (1.7 | )
Other | (2.9 | ) |  | (4.3 | ) |  | 1.3 |
Effective tax rate | 331.9 | % |  | (1.0 | )% |  | (1.6 | )%
The components of the income tax benefit disclosed as a percentage of income before taxes in the reconciliation of the statutory federal income tax rate for the year ended August 31, 2017 are magnified because our fiscal 2017 income tax benefit is unusually large in comparison to income before taxes. The primary drivers of the fiscal 2017 income tax benefit are the recognition of deferred tax benefits related to the issuance of non-qualified equity certificates in fiscal 2013 and 2014, which is disclosed within ‘Patronage earnings’ and U.S. and Brazil deductions related to the Brazilian trading partner loss, which are disclosed within ‘Statutory federal income tax rate’ and ‘Export activities at rates other than the U.S. statutory rate’, respectively, as well as a current tax benefit from retaining a significant portion of the domestic production activities deduction. A significant income tax expense within the fiscal 2017 income tax benefit is an increase in the valuation allowance against deferred tax assets generated in the Brazilian trading partner loss and Kansas state tax credits. We file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. Our uncertain tax positions are affected by the tax years that are under audit or remain subject to examination by the relevant taxing authorities. In addition to the current year, fiscal 2007 through 2016 remain subject to examination, at least for certain issues. We account for our income tax provisions in accordance with ASC Topic 740, Income Taxes, which prescribes a minimum threshold that a tax provision is required to meet before being recognized in our consolidated financial statements. This interpretation requires us to recognize in our consolidated financial statements tax positions determined more likely than not to be sustained upon examination, based on the technical merits of the position. Reconciliation of the gross beginning and ending amounts of unrecognized tax benefits for the periods presented follows:
| 2017 |  | 2016 |  | 2015
| (Dollars in thousands)
Balance at beginning of period | $ | 37,105 |  |  | $ | 72,181 |  |  | $ | 72,181 |
Additions attributable to current year tax positions | 725 |  |  | 1,387 |  |  | — |
Reductions attributable to prior year tax positions | — |  |  | (36,463 | ) |  | — |
Balance at end of period | $ | 37,830 |  |  | $ | 37,105 |  |  | $ | 72,181 |
During fiscal 2017, we increased our unrecognized tax benefits for excise tax credits related to the blending and sale of renewable fuels deducted for income taxes. During fiscal 2016, we decreased our unrecognized tax benefits due to the settlement with the Internal Revenue Service and increased our unrecognized tax benefits for excise tax credits related to the blending and sale of renewable fuels deducted for income taxes. If we were to prevail on all tax positions taken relating to uncertain tax positions, all the unrecognized tax benefits would benefit the effective tax rate. We do not believe it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months. We recognize interest and penalties related to unrecognized tax benefits in our provision for income taxes. No amounts were recognized in our Consolidated Statements of Operations for interest related to unrecognized tax benefits for the years ended August 31, 2017, 2016, and 2015. We recorded no interest payable related to unrecognized tax benefits on our Consolidated Balance Sheets as of August 31, 2017, and 2016.

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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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