Annual report pursuant to Section 13 and 15(d)

Income Taxes (Notes)

v2.4.1.9
Income Taxes (Notes)
 12 Months Ended
Dec. 31, 2014
Income Tax Disclosure [Abstract]  
Income Taxes
INCOME TAXES
  
Income tax provision included in our reported net loss consisted of the following (in thousands): 
 
 
Year Ended December 31,
 
 
2014
 
2013
 
2012
Current:
 
 
 
 
 
 
Federal
 
$
—

 
$
—

 
$
—

State
 
—

 
—

 
—

Foreign
 
4,143

 
4,082

 
145

Total current
 
4,143

 
4,082

 
145

 
 
 
 
 
 
 
Deferred:
 
 
 
 
 
 
Federal
 
—

 
—

 
—

State
 
—

 
—

 
—

Foreign
 
—

 
258

 
(141
)
Total deferred
 
—

 
258

 
(141
)
Total income tax provision
 
$
4,143

 
$
4,340

 
$
4


 
The reconciliation of the federal statutory income tax rate to our effective income tax rate is as follows: 
 
 
Year Ended December 31,
 
 
2014
 
2013
 
2012
U.S. federal statutory tax rate
 
35.0
 %
 
35.0
 %
 
35.0
 %
Non-controlling interest
 
(4.8
)%
 
(3.3
)%
 
(1.4
)%
State tax benefit
 
4.3
 %
 
4.5
 %
 
2.7
 %
Uncertain tax position
 
(12.5
)%
 
—
 %
 
—
 %
Net impact of non-U.S. taxes
 
(2.0
)%
 
(0.8
)%
 
—
 %
Valuation allowance
 
(19.8
)%
 
(34.3
)%
 
(33.2
)%
Other
 
(0.6
)%
 
(1.9
)%
 
(3.1
)%
Effective tax rate as reported
 
(0.4
)%
 
(0.8
)%
 
—
 %


Significant components of our deferred tax assets and liabilities at December 31, 2014 and 2013 are as follows (in thousands): 
 
 
December 31,
 
 
2014
 
2013
Deferred tax assets
 
 
 
 
Net operating loss carryforwards
 
 
 
 
Federal
 
$
637,919

 
$
608,631

State
 
136,917

 
111,624

Book deferred gain
 
77,182

 
77,182

Share-based compensation expense
 
28,432

 
24,089

Property, plant and equipment
 
29,483

 
27,260

Other
 
15,464

 
3,931

Total deferred tax assets
 
$
925,397

 
$
852,717

 
 
 
 
 
Deferred tax liabilities
 
 

 
 

Investment in limited partnership
 
$
(46,601
)
 
$
(109,884
)
Other
 
—

 
(142
)
Total deferred tax liabilities
 
$
(46,601
)
 
$
(110,026
)
 
 
 
 
 
Net deferred tax assets
 
878,796

 
742,691

Less: net deferred tax asset valuation allowance
 
(878,796
)
 
(742,691
)
Total net deferred tax asset
 
$
—

 
$
—


At December 31, 2014, we had federal and state net operating loss (“NOL”) carryforwards of approximately $3.5 billion. This excludes the NOL carryforwards related to unrecognized tax benefits and stock compensation windfalls that have not been recognized under GAAP. These NOL carryforwards will expire between 2028 and 2034.
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 net deferred tax assets as of December 31, 2014 and 2013.  We will continue to evaluate our ability to release the valuation allowance in the future. The change in the net deferred tax asset valuation allowance was $136.1 million for the year ended December 31, 2014.

Changes in the balance of unrecognized tax benefits are as follows (in thousands): 
 
Year Ended December 31,
 
2014
 
2013
Balance at beginning of the year
$
19,484

 
$
19,773

Additions based on tax positions related to current year
85,932

 
—

Additions for tax positions of prior years
—

 
2,162

Reductions for tax positions of prior years
(925
)
 
(2,451
)
Settlements
—

 
—

Balance at end of the year
$
104,491

 
$
19,484

 
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. Any applicable interest and penalties related to unrecognized tax benefits would be recorded to our income tax provision.

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 2010 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 2011 through 2014 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 $130.5 million will be reflected in APIC.