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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 U.S. enacted the Tax Cuts and Jobs Act (“the Act”). The Act, which is also commonly referred to as “U.S. tax reform,” significantly changes U.S. corporate income tax laws by, among other things, reducing the U.S. corporate tax rate from 35% to 21%, starting in 2018, and creating a territorial tax system with a one-time mandatory tax on previously deferred foreign earnings of U.S. subsidiaries. As a result, we recorded an expense of $0.8 million in the fourth quarter of 2017. This amount, which is included in “Income tax expense” on the consolidated statements of income, consists of two components: (i) $0.7 million relating to the one-time mandatory tax on previously deferred earnings of certain non-U.S. subsidiaries that are wholly owned by one of our U.S. subsidiaries and (ii) $0.1 million resulting from the revaluation of our net deferred tax assets in the U.S. based on the new lower corporate income tax rate. Although the $0.8 million expense represents what we believe to be a reasonable estimate of the impact of the income tax effects of the Act on our consolidated financial statements as of December 31, 2017, it should be considered provisional. We are continuing to gather additional information to more precisely compute our deferred tax assets balance in the U.S., as well as the income tax expense associated with the one-time mandatory tax. Any adjustments to these provisional amounts will be reported as a component of “Income tax expense” on the consolidated statements of income in the reporting period in which any such adjustments are determined, which will be no later than the fourth quarter of 2018, and are not expected to be significant. Due to the complexity of the new Global Intangible Low-Tax Income (GILTI) tax rules, we are continuing to evaluate this provision of the Act and the application of FASB’s Accounting Standards Codification 740 (ASC 740). Under U.S. GAAP, we are allowed to make an accounting policy choice of either (i) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (ii) factoring such amounts into a company’s measurement of its deferred taxes (the “deferred method”). Our selection of an accounting policy with respect to the new GILTI tax rules will depend, in part, on analyzing our global income to determine whether we expect to have future U.S. inclusions in taxable income related to GILTI and, if so, what the impact is expected to be. Because whether we expect to have future U.S. inclusions in taxable income related to GILTI depends on not only our current structure and estimated future results of global operations, but also our intent and ability to modify our structure and/or our business, we are not yet able to reasonably estimate the effect of this provision of the Tax Act. Therefore, we have not made any adjustments related to potential GILTI tax in our consolidated financial statements as of December 31,2017, and have not made a policy decision regarding whether to record deferred taxes on GILTI. Due to the complexity of the new Base Erosion Anti-Abuse Tax (BEAT) rules, we are continuing to evaluate this provision of the Act and the application of ASC 740. Under U.S. GAAP, because the BEAT provisions are designed to be an “incremental tax,” BEAT is treated as a current-period expense when incurred (the period cost method). Therefore, we have not made any adjustments related to the potential BEAT in our consolidated financial statements. Components of income tax expense related to certain of our continuing operations conducted through separate taxable wholly owned corporate subsidiaries were as follows:
| Year Ended December 31,
| 2017 |  | 2016 |  | 2015
| (Thousands of Dollars)
Current: |  |  |  |  |
U.S. | $ | 3,117 |  |  | $ | 2,280 |  |  | $ | 908 |
Foreign | 6,335 |  |  | 6,329 |  |  | 9,820 |
Foreign withholding tax | 479 |  |  | 3,833 |  |  | 1,926 |
Total current | 9,931 |  |  | 12,442 |  |  | 12,654 |
Deferred: |  |  |  |  |
U.S. | 1,468 |  |  | 2,680 |  |  | 1,022 |
Foreign | (1,065 | ) |  | (1,122 | ) |  | (1,464 | )
Foreign withholding tax | (397 | ) |  | (2,027 | ) |  | 2,500 |
Total deferred | 6 |  |  | (469 | ) |  | 2,058 |
Total income tax expense | $ | 9,937 |  |  | $ | 11,973 |  |  | $ | 14,712 |
The difference between income tax expense recorded in our consolidated statements of income and income taxes computed by applying the statutory federal income tax rate (35% for all years presented) to income before income tax expense is due to the fact that the majority of our income is not subject to federal income tax due to our status as a limited partnership. We record a tax provision related to the amount of undistributed earnings of our foreign subsidiaries expected to be repatriated. The tax effects of significant temporary differences representing deferred income tax assets and liabilities were as follows:
| December 31,
| 2017 |  | 2016
| (Thousands of Dollars)
Deferred income tax assets: |  |  |
Net operating losses | $ | 20,688 |  |  | $ | 31,539 |
Employee benefits | 483 |  |  | 697 |
Environmental and legal reserves | 185 |  |  | 148 |
Allowance for bad debt | 1,982 |  |  | 2,697 |
Other | 2,050 |  |  | 1,697 |
Total deferred income tax assets | 25,388 |  |  | 36,778 |
Less: Valuation allowance | (11,251 | ) |  | (12,759 | )
Net deferred income tax assets | 14,137 |  |  | 24,019 |
Deferred income tax liabilities: |  |  |
Property, plant and equipment | (36,176 | ) |  | (43,788 | )
Foreign withholding tax | — |  |  | (384 | )
Total deferred income tax liabilities | (36,176 | ) |  | (44,172 | )
Net deferred income tax liability | $ | (22,039 | ) |  | $ | (20,153 | )
Reported on the consolidated balance sheets as: |  |  |
Deferred income tax asset | $ | 233 |  |  | $ | 2,051 |
Deferred income tax liability | (22,272 | ) |  | (22,204 | )
Net deferred income tax liability | $ | (22,039 | ) |  | $ | (20,153 | )
As of December 31, 2017, our U.S. and foreign corporate operations have net operating loss carryforwards for tax purposes totaling $79.9 million and $13.1 million, respectively, which are subject to various limitations on use and expire in years 2025 through 2036 for U.S. losses and in years 2018 through 2026 for foreign losses. As of December 31, 2017 and 2016, we recorded a valuation allowance of $11.3 million and $12.8 million, respectively, related to our deferred tax assets. We estimate the amount of valuation allowance based upon our expectations of taxable income in the various jurisdictions in which we operate and the period over which we can utilize those future deductions. The valuation allowance reflects uncertainties related to our ability to utilize certain net operating loss carryforwards before they expire. In 2017, there was a $1.9 million decrease in the valuation allowance for the U.S. net operating loss and a $0.4 million increase in the foreign net operating loss valuation allowance due to changes in our estimates of the amount of those loss carryforwards that will be realized, based upon future taxable income. The realization of net deferred income tax assets recorded as of December 31, 2017 is dependent upon our ability to generate future taxable income in the United States. We believe it is more likely than not that the net deferred income tax assets as of December 31, 2017 will be realized, based on expected future taxable income.

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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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