Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.3.1.900
Income Taxes
12 Months Ended
Dec. 31, 2015
Income Tax Disclosure [Abstract]  
Income Taxes
INCOME TAXES
  
Income tax benefit (provision) included in our reported net loss consisted of the following (in thousands): 
 
 
Year Ended December 31,
 
 
2015
 
2014
 
2013
Current:
 
 
 
 
 
 
Federal
 
$

 
$

 
$

State
 

 

 

Foreign
 
(1,970
)
 
(4,143
)
 
(4,082
)
Total current
 
(1,970
)
 
(4,143
)
 
(4,082
)
 
 
 
 
 
 
 
Deferred:
 
 
 
 
 
 
Federal
 

 

 

State
 

 

 

Foreign
 
2,066

 

 
(258
)
Total deferred
 
2,066

 

 
(258
)
Total income tax benefit (provision)
 
$
96

 
$
(4,143
)
 
$
(4,340
)

 
The reconciliation of the federal statutory income tax rate to our effective income tax rate is as follows: 
 
 
Year Ended December 31,
 
 
2015
 
2014
 
2013
U.S. federal statutory tax rate
 
35.0
 %
 
35.0
 %
 
35.0
 %
Non-controlling interest
 
(2.3
)%
 
(4.8
)%
 
(3.3
)%
State tax rate
 
1.9
 %
 
4.3
 %
 
4.5
 %
Uncertain tax position
 
 %
 
(12.5
)%
 
 %
Net impact of non-U.S. taxes
 
(1.3
)%
 
(2.0
)%
 
(0.8
)%
Valuation allowance
 
(30.1
)%
 
(19.8
)%
 
(34.3
)%
Other
 
(3.1
)%
 
(0.6
)%
 
(1.9
)%
Effective tax rate as reported
 
0.1
 %
 
(0.4
)%
 
(0.8
)%


Significant components of our deferred tax assets and liabilities at December 31, 2015 and 2014 are as follows (in thousands): 
 
 
December 31,
 
 
2015
 
2014
Deferred tax assets
 
 
 
 
Net operating loss carryforwards and credits
 
 
 
 
Federal and foreign
 
$
862,218

 
$
637,919

State
 
166,321

 
136,917

Book deferred gain
 
77,182

 
77,182

Share-based compensation expense
 
71,693

 
28,432

Property, plant and equipment
 
12,957

 
29,483

Derivative instruments
 
54,052

 
389

Other
 
14,366

 
15,075

Total deferred tax assets
 
1,258,789

 
925,397

 
 
 
 
 
Deferred tax liabilities
 
 

 
 

Investment in limited partnership
 
(57,466
)
 
(46,601
)
Convertible debt
 
(128,948
)
 

Total deferred tax liabilities
 
(186,414
)
 
(46,601
)
 
 
 
 
 
Net deferred tax assets
 
1,072,375

 
878,796

Less: net deferred tax asset valuation allowance
 
(1,070,309
)
 
(878,796
)
Total net deferred tax asset
 
$
2,066

 
$




The federal deferred tax assets presented above do not include the state tax benefits as our net deferred state tax assets are offset with a full valuation allowance.
At December 31, 2015, we had federal and state net operating loss (“NOL”) carryforwards of approximately $3.2 billion and $2.1 billion, respectively. These NOL carryforwards will expire between 2025 and 2035.
Due to our history of NOLs, current year NOLs and significant risk factors related to our ability to generate taxable income, we have established a valuation allowance to fully offset our federal and state net deferred tax assets as of December 31, 2015 and our total net deferred tax assets as of 2014.  We will continue to evaluate our ability to release the valuation allowance in the future. The increase in the net deferred tax asset valuation allowance was $191.5 million for the year ended December 31, 2015. Deferred tax assets and deferred tax liabilities are classified as non-current in our Consolidated Balance Sheets.
 
Changes in the balance of unrecognized tax benefits are as follows (in thousands): 
 
Year Ended December 31,
 
2015
 
2014
Balance at beginning of the year
$
104,491

 
$
19,484

Additions based on tax positions related to current year

 
85,932

Additions for tax positions of prior years

 

Reductions for tax positions of prior years
(851
)
 
(925
)
Settlements

 

Balance at end of the year
$
103,640

 
$
104,491

 
Our effective tax rate will not be affected if the unrecognized federal income tax benefits provided above were recognized. Currently, we do not recognize any accrued liabilities, interest and penalties associated with the unrecognized tax benefits provided above in our Consolidated Statements of Operations or our Consolidated Balance Sheets. We recognize interest and penalties related to income tax matters as part of income tax expense.

We experienced an ownership change within the provisions of Internal Revenue Code (“IRC”) Section 382 in 2008, 2010 and 2012. An analysis of the annual limitation on the utilization of our NOLs was performed in accordance with IRC Section 382.  It was determined that IRC Section 382 will not limit the use of our NOLs in full over the carryover period. We will continue to monitor trading activity in our shares which may cause an additional ownership change which could ultimately affect our ability to fully utilize our existing tax NOL carryforwards.

We are subject to taxation in the U.S., United Kingdom, Chile, Singapore and various state jurisdictions. The federal tax returns for the years before 2011 remain open to examination for the purpose of determining the amount of remaining tax NOL and other carryforwards. The federal tax returns for the years 2012 through 2015 remain open for all purposes of examination by the IRS and other taxing authorities.

Accounting for share-based compensation provides that when settlement of a share based award contributes to an NOL carryforward, neither the associated excess tax benefit nor the credit to additional paid-in capital (“APIC”) should be recorded until the share-based award deduction reduces income tax payable. Upon utilization of the loss in future periods, a benefit of $168.7 million will be reflected in APIC.