Income Taxes

12 Months Ended

Dec. 31, 2015

Income Taxes

Income Taxes

Note 5: Income Taxes

The following table lists the components of the provision for income taxes:

Years ended December 31,	2015			2014		2013
(in thousands)
Current (benefit) provision:
Federal	$	(24,727	)	$	119,074	$	104,890
State		(3,638	)		19,858		15,627
Foreign		7,898			2,907		1,918
Deferred (benefit) provision:
Federal		(31,178	)		11,514		(12,025	)
State		(1,835	)		840		(1,035	)
Total income tax (benefit) provision	$	(53,480	)	$	154,193	$	109,375

Reconciliation between the federal statutory rate and RPC’s effective tax rate is as follows:

Years ended December 31,	2015			2014			2013
Federal statutory rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal benefit		—			3.3			3.8
Tax credits		0.3			(0.7	)		(0.3	)
Non-deductible expenses		(1.3	)		0.4			0.5
Other		0.9			0.6			0.6
Effective tax rate		34.9	%		38.6	%		39.6	%

Significant components of the Company’s deferred tax assets and liabilities are as follows:

December 31,	2015			2014
(in thousands)
Deferred tax assets:
Self-insurance	$	7,274		$	7,675
Pension		12,048			12,555
State net operating loss carry forwards		370			451
Bad debts		4,041			5,755
Accrued payroll		1,330			2,833
Stock-based compensation		5,885			5,583
All others		4,704			2,121
Valuation allowance		(276	)		(2	)
Gross deferred tax assets		35,376			36,971
Deferred tax liabilities:
Depreciation		(137,606	)		(172,813	)
Goodwill amortization		(8,887	)		(7,974	)
All others		(4,378	)		(3,739	)
Gross deferred tax liabilities		(150,871	)		(184,526	)
Net deferred tax liabilities	$	(115,495	)	$	(147,555	)

As of December 31, 2015, undistributed earnings of the Company's foreign subsidiaries totaled $12.6 million. Additional U.S. taxes due upon full repatriation would be approximately $500 thousand. However, those earnings are considered to be indefinitely reinvested and, accordingly, no U.S. federal and state income taxes have been provided thereon. Upon distribution of these earnings in the form of dividends or otherwise, the Company would be subject to both U.S. income taxes and withholding taxes payable to the foreign countries. The Company's current intention is to permanently reinvest funds held in our foreign subsidiaries outside of the U.S., with the possible exception of repatriation of funds that have been previously subject to U.S. federal and state taxation or when it would be tax effective through the utilization of foreign tax credits, or would otherwise create no additional U.S. tax cost.

As of December 31, 2015, the Company has net operating loss carry forwards related to state income taxes of approximately $9.6 million that will expire between 2016 and 2034. As of December 31, 2015, the Company has a valuation allowance of approximately $280 thousand, representing the tax affected amount of loss carry forwards that the Company does not expect to utilize, against the corresponding deferred tax asset.

Total net income tax (refunds) payments were $(7.9) million in 2015, $152.2 million in 2014, and $122.9 million in 2013.

The Company and its subsidiaries are subject to U.S. federal and state income taxes in multiple jurisdictions. In many cases our uncertain tax positions are related to tax years that remain open and subject to examination by the relevant taxing authorities. The Company’s 2012 through 2015 tax years remain open to examination. Additional years may be open to the extent attributes are being carried forward to an open year. In 2015, the Internal Revenue Service (IRS) completed an examination of the Company’s U.S. federal income tax return and related matters for the 2011 tax year that yielded no adjustments.

During 2015 and 2014, the Company recognized an increase in its liability for unrecognized tax benefits in the current year related primarily to refund claims filed for state income taxes. If recognized, the liability would affect our effective rate. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	2015		2014
Balance at January 1	$	23,267,000	$	16,345,000
Additions based on tax positions related to the current year		2,171,000		5,193,000
Additions for tax positions of prior years		714,000		1,729,000
Balance at December 31	$	26,152,000	$	23,267,000

The Company’s policy is to record interest and penalties related to income tax matters as income tax expense. Accrued interest and penalties as of December 31, 2015 and 2014 were approximately $411 thousand and $146 thousand, respectively.

It is reasonably possible that the amount of the unrecognized tax benefits with respect to our unrecognized tax positions will significantly decrease in the next 12 months. These changes may result from, among other things, state tax settlements under or conclusions of ongoing examinations or reviews, however, quantification of an estimated range cannot be made at this time.

The Protecting Americans from Tax Hikes Act of 2015 (“PATH”) was signed into law on December 18, 2015 and retroactively reinstated the bonus depreciation deduction for 2015 and future years. The acceleration of deductions on 2015 qualifying capital expenditures resulting from the bonus depreciation provision had no impact on our 2015 effective tax rate.

In September 2013, the U.S. Department of the Treasury issued final regulations under Internal Revenue Code Sections 162(a), 263(a), and 168 that provide guidance on the deduction and capitalization of expenditures related to tangible property. Adoption of these regulations required certain mandatory and elective accounting methods with respect to property and equipment, inventory and supplies. RPC adopted these regulations as of January 1, 2014 and filed all required method changes. The adoption resulted in accelerated deductions totaling approximately $21.8 million (gross) for assets placed in service before December 31, 2013, approximately $16.2 million (gross) for assets placed in service during 2014, and approximately $13.5 million (gross) for assets placed in service in 2015.