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
The components of the provision for income taxes for the years ended December 31, 2018, 2017 and 2016 are as follows:
($ in thousands)
2018
 
2017
 
2016
Federal:
 
 
 
 
 
Current
$

 
$
(376
)
 
$

Deferred
48,738

 
3,634

 
(29,082
)
 
48,738

 
3,258

 
(29,082
)
State:
 
 
 
 
 
Current
1,551

 
74

 

Deferred
966

 
(204
)
 
1,110

 
2,517

 
(130
)
 
1,110

Total expense (benefit)
$
51,255

 
$
3,128

 
$
(27,972
)

Reconciliation between the amounts determined by applying the federal statutory rate of 21% for year ended December 31, 2018 and 35% for the years ended December 31, 2017 and 2016 to income tax (expense)/benefit is as follows:
($ in thousands)
2018
 
2017
 
2016
Tax at federal statutory rate
$
47,275

 
$
5,510

 
$
(28,392
)
State taxes, net of federal benefit
1,874

 
176

 
(216
)
Non-deductible expenses
2,423

 
1,582

 
498

Stock-based compensation
(426
)
 
(655
)
 

Valuation allowance
(1,151
)
 
273

 
879

Effect of change in enacted Tax Act

 
(3,448
)
 

Other
1,260

 
(310
)
 
(741
)
Total expense (benefit)
$
51,255

 
$
3,128

 
$
(27,972
)

Deferred tax assets and liabilities are recognized for estimated future tax effects of temporary differences between the tax basis of an asset or liability and its reported amount in the consolidated financial statements. The significant items giving rise to deferred tax assets (liabilities) at December 31, 2018 and 2017, respectively, are as follows:
($ in thousands)
2018
 
2017
Deferred Income Tax Assets
 
 
 
Accrued liabilities
$
769

 
$
1,264

Allowance for doubtful accounts
21

 
94

Goodwill and other intangible assets
4,010

 
5,304

Stock‑based compensation
2,632

 
2,960

Net operating losses
111,580

 
56,788

Other
63

 
69

Noncurrent deferred tax assets
119,075

 
66,479

Total deferred tax assets
119,075

 
66,479

Valuation allowance

 
(1,151
)
Total deferred tax assets — net
119,075

 
65,328

Deferred Income Tax Liabilities
 
 
 
Property and equipment
(172,164
)
 
(68,811
)
Prepaid expenses
(1,194
)
 
(965
)
Other

 
(131
)
Noncurrent deferred tax liabilities
(173,358
)
 
(69,907
)
Net deferred tax liability
$
(54,283
)
 
$
(4,579
)

At December 31, 2018, the Company had approximately $516.0 million of federal net operating loss carryforwards that will begin to expire in 2032 and state net operating losses of approximately $50.0 million that will begin to expire in 2024. Utilization of net operating loss carryforwards may be limited due to past or future ownership changes. As of December 31, 2018, the Company was no longer in a cumulative book loss for the current and two prior years. Based on its estimate of future taxable income, the Company determined it is more likely than not that it will utilize its deferred tax assets. Accordingly, the valuation allowance against its state deferred tax assets was reversed.
The Company’s U.S. federal income tax returns for the years ended December 31, 2015 through December 31, 2017 remain open to examination by the Internal Revenue Service under the applicable U.S. federal statute of limitations provisions. The various states in which the Company is subject to income tax are generally open to examination for the tax years ended after December 31, 2014.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Act”).  The Tax Act makes broad and complex changes to the U.S. tax code including, but not limited to (1) reducing the U.S. federal corporate tax rate from 35% to 21%, (2) eliminating the corporate alternative minimum tax (“AMT’’) and changing how existing AMT credits can be realized, (3) creating a new limitation on deductible interest expense, (4) changes to bonus depreciation, and (5) changing rules related to use and limitations of net operating loss carryforwards for tax years beginning after December 31, 2017. We have completed our analysis of the Tax Act. The only material items that impacted the Company’s consolidated financial statements in 2017 were bonus depreciation and the corporate rate reduction. While the corporate rate reduction was effective January 1, 2018, we accounted for the effect of the rate change during the year ended December 31, 2017, the year of enactment. Consequently, we recorded a $3.4 million decrease to the net deferred tax liability, with a corresponding net adjustment to deferred tax benefit.

In June 2006, the FASB issued FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109 (subsequently codified as ASC 740‑10, Income Taxes, Under FASB Statement No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162). ASC 740‑10 prescribes a comprehensive model for recognizing, measuring, presenting, and disclosing in the consolidated financial statements tax positions taken or expected to be taken on a tax return, including a decision to file or not to file in a particular jurisdiction.
The Company evaluated all tax positions and determined that the aggregate exposure under ASC 740‑10 did not have a material effect on the consolidated financial statements during the year ended December 31, 2018, 2017 and 2016. Therefore, no adjustments have been made to the consolidated financial statements related to the implementation of ASC 740‑10. The Company will continue to evaluate its tax positions in accordance with ASC 740‑10 and will recognize any future effect as a charge to income in the applicable period.
Income tax penalties and interest assessments recognized under ASC 740‑10 are accrued as a tax expense in the period that the Company’s taxes are in an uncertain tax position. Any accrued tax penalties or interest assessments will remain until the uncertain tax position is resolved with the taxing authorities or until the applicable statute of limitations has expired.