Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v3.10.0.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2018
Income Tax Disclosure [Abstract]  
INCOME TAXES
INCOME TAXES
A reconciliation of the U.S. federal statutory tax rate to our income tax (expense) benefit for 2018, 2017 and 2016, is as follows (in thousands):
 
Years Ended December 31,
 
2018
 
2017
 
2016
 
Amount
 
%
 
Amount
 
%
 
Amount
 
%
U.S. statutory rate
$
4,159

 
21.0%
 
$
24,136

 
35.0%
 
$
(1,945
)
 
35.0%
Increase (decrease) resulting from:
 
 
 
 
 
 
 
 
 
 
 
Permanent differences
(206
)
 
(1.0)%
 
(330
)
 
0.5%
 
(64
)
 
1.1%
State income taxes
(571
)
 
(2.9)%
 
366

 
(0.5)%
 
(32
)
 
0.6%
Other
374

 
1.9%
 
(118
)
 
0.2%
 
—

 
—%
Discrete items
 
 
 
 
 
 
 
 
 
 
 
Vesting of common stock
(19
)
 
(0.1)%
 
(253
)
 
0.4%
 
—

 
—%
Change in valuation allowance
(4,308
)
 
(21.7)%
 
392

 
(0.5)%
 
—

 
—%
Income tax (expense) benefit
$
(571
)
 
(2.8)%

$
24,193

 
35.1%
 
$
(2,041
)
 
36.7%


Income Tax (Expense) Benefit - Significant components of our income tax (expense) benefit for 2018, 2017 and 2016, were as follows (in thousands):
 
Years Ended December 31,
 
2018
 
2017
 
2016
Current
 
 
 
 
 
Federal
$
—

 
$
—

 
$
(302
)
State
(317
)
 
(83
)
 
(361
)
  Total current
(317
)
 
(83
)
 
(663
)
Deferred
 
 
 
 
 
Federal
3,410

 
24,219

 
(1,549
)
State
644

 
449

 
171

Valuation allowance
(4,308
)
 
(392
)
 
—

Total deferred
(254
)
 
24,276

 
(1,378
)
Income tax (expense) benefit
$
(571
)
 
$
24,193

 
$
(2,041
)


Deferred Taxes - Significant components of our deferred tax assets and liabilities at December 31, 2018 and 2017, were as follows (in thousands):
 
December 31,
 
2018
 
2017
Deferred tax assets
 
 
 
Employee benefits
$
758

 
$
962

Uncompleted contracts
2,380

 
2,664

Stock based compensation expense
266

 
350

Allowance for doubtful accounts
84

 
99

Long-term incentive awards
150

 
280

Federal net operating losses
9,962

 
13,190

State net operating losses
1,155

 
511

Other
395

 
394

    Total deferred tax assets
15,150

 
18,450

Deferred tax liabilities
 
 
 
Property, plant and equipment
(10,199
)
 
(17,605
)
Prepaid insurance
(450
)
 
(453
)
   Total deferred tax liabilities
(10,649
)
 
(18,058
)
Net deferred tax assets
4,501

 
392

Valuation allowance
(4,701
)
 
(392
)
Net deferred taxes (1)
$
(200
)
 
$
—


______________
(1)    Amounts are included in other noncurrent liabilities on our Balance Sheet.

At December 31, 2018 and 2017, we had total DTAs of $15.2 million and $18.5 million, respectively (including U.S. federal net operating loss(es) ("NOL(s)") DTAs of $10.0 million and $13.2 million, respectively). On a periodic and ongoing basis we evaluate our DTAs (including our NOL DTAs) and assess the appropriateness of our valuation allowance(s) ("VA(s)"). In assessing the need for a VA, we consider both positive and negative evidence related to the likelihood of realizing our DTAs. If, based upon the available evidence, our assessment indicates that it is more likely than not that some or all of the DTAs will not be realized, we record a VA. Our assessments include, among other things, the amount of taxable temporary differences that will result in future taxable income, the value and quality of our backlog, evaluations of existing and anticipated market conditions, analysis of recent and historical operating results (including cumulative losses over multiple periods) and projections of future results and strategic plans, as well as asset expiration dates. As a result of our assessment and due to cumulative losses for the three years ended December 31, 2018, we believe the negative evidence outweighs the positive evidence with respect to our ability to realize our U.S. federal NOL DTAs, and accordingly, at December 31, 2018 and 2017, we had VAs of $4.7 million and $0.4 million, respectively, offsetting our total DTAs. At December 31, 2018, we had gross U.S. federal NOL carryforwards (excluding VAs) of $47.4 million, which will expire in 2037, and we had gross state NOL carryforwards (excluding VAs) of $24.5 million, which will expire in 2035 through 2038.

Uncertain Tax Positions - Reserves for uncertain tax positions are recognized when we consider it more likely than not that additional tax will be due in excess of amounts reflected in our income tax returns, irrespective of whether or not we have received tax assessments. Interest and penalties on uncertain tax positions are recorded within income tax expense. Tax returns subject to examination by the U.S. Internal Revenue Service are open for years after 2014. At December 31, 2018 and 2017, we had no material reserves for uncertain tax positions.

Tax Cuts and Jobs Act - In December 2017, the Tax Cuts and Jobs Act was signed into law which, among other things, reduced the U.S. federal corporate income tax rate from a maximum of 35.0% to 21.0% (effective January 1, 2018). As a result, in accordance with Staff Accounting Bulletin 118, during 2017 we recorded provisional amounts related to the impacts of the Tax Cuts and Jobs Act. Such impacts were immaterial to our deferred tax position at December 31, 2017. During 2018, we filed our 2017 U.S. federal tax return and applicable state tax returns, which did not result in any material adjustment to the provisional amounts we recorded during 2017.