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Income Taxes
 12 Months Ended
Dec. 31, 2018
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Our U.S. timber operations are primarily conducted by our REIT entity and is generally not subject to U.S. federal and state income taxation. Our New Zealand timber operations are conducted by the New Zealand subsidiary which is subject to corporate level tax in New Zealand. Our non-REIT qualifying operations, which are subject to corporate-level tax, are held by various TRS. These operations include our log trading business and certain real estate activities, such as the sale , entitlement and development of HBU properties.
PROVISION FOR INCOME TAXES FROM CONTINUING OPERATIONS
The provision for income taxes for each of the three years ended December 31 follows:
 
2018
 
2017
 
2016
Current
 
 
 
 
 
U.S. federal

$2

 

$261

 
—

State
37

 
(38
)
 
(254
)
Foreign
(1,914
)
 
(245
)
 
(241
)
 
(1,875
)
 
(22
)
 
(495
)
Deferred
 
 
 
 
 
U.S. federal
3,803

 
13,028

 
5,403

State
146

 
—

 
(280
)
Foreign
(23,360
)
 
(21,659
)
 
(6,079
)
 
(19,411
)
 
(8,631
)
 
(956
)
Changes in valuation allowance
(3,950
)
 
(13,028
)
 
(3,613
)
Total

($25,236
)
 

($21,681
)
 

($5,064
)

A reconciliation of the U.S. federal statutory income tax rate to the actual income tax rate for each of the three years ended December 31 follows:
 
 
2018
 
2017
 
2016
U.S. federal statutory income tax rate
 

($29,939
)
 
(21.0
)%
 

($64,141
)
 
(35.0
)%
 

($77,992
)
 
(35.0
)%
U.S. and foreign REIT income
 
32,949

 
23.1

 
63,813

 
34.8

 
82,037

 
36.8

Matariki Group and Rayonier New Zealand Ltd
 
(23,166
)
 
(16.2
)
 
(19,182
)
 
(10.5
)
 
(4,799
)
 
(2.2
)
Transition tax
 
—

 
—

 
(3,506
)
 
(1.9
)
 
—

 
—

Change in valuation allowance
 
(3,950
)
 
(2.8
)
 
(13,028
)
 
(7.1
)
 
(3,613
)
 
(1.6
)
ASU No. 2016-16 adoption impact
 
—

 
—

 
16,631

 
9.1

 
—

 
—

Deemed repatriation of unremitted foreign earnings
 
—

 
—

 
7,368

 
4.0

 
—

 
—

Reduction of deferred tax asset for statutory rate change
 
—

 
—

 
(10,499
)
 
(5.7
)
 
—

 
—

Foreign income tax withholding
 
(1,848
)
 
(1.3
)
 
—

 
—

 
—

 
—

Other
 
718

 
0.5

 
863

 
0.5

 
(697
)
 
(0.3
)
Income tax (expense) benefit as reported for net income
 

($25,236
)
 
(17.7
)%
 

($21,681
)
 
(11.8
)%
 

($5,064
)
 
(2.3
)%

The Company’s effective tax rate is below the 21 percent U.S. statutory rate primarily due to tax benefits associated with being a REIT.
DEFERRED TAXES
Deferred income taxes result from differences between the timing of recognizing revenues and expenses for financial book purposes versus income tax purposes. The nature of the temporary differences and the resulting net deferred tax asset/liability for the two years ended December 31 follows:
 
2018
 
2017
Gross deferred tax assets:
 
 
 
Pension, postretirement and other employee benefits

$1,791

 

$1,017

New Zealand subsidiary
14,252

 
40,224

CBPC tax credit carry forwards
14,555

 
14,641

Capitalized real estate costs
7,386

 
7,058

U.S. TRS net operating loss
5,747

 
1,872

Land basis difference
11,282

 
11,090

Other
4,047

 
5,079

Total gross deferred tax assets
59,060

 
80,981

Less: Valuation allowance
(38,839
)
 
(34,889
)
Total deferred tax assets after valuation allowance

$20,221

 

$46,092

Gross deferred tax liabilities:
 
 
 
Accelerated depreciation
(73
)
 
(35
)
New Zealand subsidiary
(66,430
)
 
(72,527
)
Timber installment sale
(4,823
)
 
(4,706
)
Other
(1,272
)
 
(1,270
)
Total gross deferred tax liabilities
(72,598
)
 
(78,538
)
Net deferred tax liability reported as noncurrent

($52,377
)
 

($32,446
)

Foreign net operating loss (“NOL”) and tax credit carryforwards as of the two years ended December 31 follows: 
 
Gross
Amount
 
Valuation
Allowance
 
Expiration
2018
 
 
 
 
 
New Zealand subsidiary NOL carryforwards

$31,052

 
—

 
None
U.S. net deferred tax asset
24,284

 
(24,284
)
 
None
Cellulosic Biofuel Producer Credit
14,555

 
(14,555
)
 
2019
Total Valuation Allowance
 
 

($38,839
)
 
 
2017
 
 
 
 
 
New Zealand subsidiary NOL carryforwards

$137,949

 
—

 
None
U.S. net deferred tax asset
20,248

 
(20,248
)
 
None
Cellulosic Biofuel Producer Credit
14,641

 
(14,641
)
 
2019
Total Valuation Allowance
 
 

($34,889
)
 
 

UNRECOGNIZED TAX BENEFITS
A reconciliation of the beginning and ending unrecognized tax benefits for the three years ended December 31 follows:
 
2018
 
2017
 
2016
Balance at January 1,
—

 

$135

 

$135

Decreases related to prior year tax positions (a)
—

 
(135
)
 
—

Increases related to prior year tax positions
—

 
—

 
—

Balance at December 31,
—

 
—

 

$135

 
 
 
 
(a)
Result of a lapse of the applicable statute of limitations.
The Company records interest (and penalties, if applicable) related to unrecognized tax benefits in non-operating expense. The Company recorded no benefit to interest expense in 2018, 2017 and 2016, respectively and had no recorded liabilities for the payment of interest at December 31, 2018 and 2017.
TAX STATUTES
The following table provides detail of the tax years that remain open to examination by the IRS and other significant taxing jurisdictions:
Taxing Jurisdiction
Open Tax Years
U.S. Internal Revenue Service
2015 - 2017
New Zealand Inland Revenue
2013 - 2017

U.S. TAX REFORM
The Tax Cuts and Jobs Act (the “Act”) was signed into law on December 22, 2017 making significant changes to the Internal Revenue Code. Changes include a permanent reduction in the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018 and a one-time transition tax on the deemed repatriation of deferred foreign earnings in 2017. The Company has completed its assessment of the accounting implications of the Act.
As a result of the reduction in the U.S. corporate tax rate, the Company remeasured its U.S. deferred tax assets and liabilities and recorded zero tax expense due to a full valuation allowance. The deemed repatriation on deferred foreign income was de minimis as the income inclusion was offset by net operating losses (“NOL”).
Effective January 1, 2018, the Act subjects a U.S. shareholder to current tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. The Company’s REIT entity has a GILTI income inclusion of $0.8 million in the current year. The Company has made the policy election to account for the tax effects of GILTI as a component of income tax expense in the period the tax arises, to the extent applicable.
ADOPTION OF ASU 2018-02
See Note 1 — Summary of Significant Accounting Policies for discussion on the adoption of ASU 2018-02.