Income Taxes

The following table summarizes our provision for income taxes for the periods presented:



	Successor					Predecessor
	Year Ended			September 13 Through		January 1 Through		Year Ended
	December 31,			December 31,		September 12,		December 31,
	2017			2016		2016		2015
Current income taxes (benefit)
Federal	$	—		$	—	$	—	$	(660	)
State	—			—		—		1
	—			—		—		(659		)
Deferred income taxes (benefit)
Federal	(4,943		)	—		—		(261		)
State	—			—		—		(4,451		)
	(4,943		)	—		—		(4,712		)
	$	(4,943	)	$	—	$	—	$	(5,371	)

The following table reconciles the difference between the income tax benefit computed by applying the statutory tax rate to our income (loss) before income taxes and our reported income tax benefit for the periods presented:



	Successor												Predecessor
	Year Ended						September 13 Through						January 1 Through					Year Ended
	December 31,						December 31,						September 12,					December 31,
	2017						2016						2016					2015
Computed at federal statutory rate	$	9,701		35.0	%		$	(1,854	)		35.0	%	$	369,111		35.0	%	$	(555,916	)	35.0	%
State income taxes, net of federal income tax benefit	(1,383		)	(5.0	)%		197				(3.7	)%	1,989			0.2	%	(4,438		)	0.3	%
Change in valuation allowance	(24,353		)	(87.8	)%		1,657				(31.3	)%	(384,692		)	(36.5	)%	554,879			(35.0	)%
Effect of rate change on the valuation allowance	(86,612		)	(312.5	)%	—	—			—	—	%	—			—	%	—			—	%
Effect of rate change	86,612			312.5	%		—				—	%	—			—	%	—			—	%
Reorganization adjustments	10,760			38.8	%		—				—	%	13,572			1.3	%	—			—	%
Other, net	332			1.2	%		—				—	%	20			—	%	104			—	%
	$	(4,943	)	(17.8	)%		$	—			—	%	$	—		—	%	$	(5,371	)	0.3	%

The following table summarizes the principal components of our deferred income tax assets and liabilities as of the dates presented:



	December 31,
	2017			2016
Deferred tax assets:
Property and equipment	$	37,345		$	183,303
Pension and postretirement benefits	452			710
Share-based compensation	435			28
Net operating loss (“NOL”) carryforwards	127,821			87,622
Fair value of derivative instruments	8,752			9,579
Other	7,608			7,166
	182,413			288,408
Less: Valuation allowance	(177,470		)	(288,408		)
Net deferred tax assets	$	4,943		$	—

On December 22, 2017, the U.S. Congress enacted the budget reconciliation act commonly referred to as the Tax Cuts and Jobs Act (the “TCJA”). The TCJA makes broad and complex changes to the U.S. tax code, including but not limited to, (i) the requirement to pay a one-time transition tax on all undistributed earnings of foreign subsidiaries; (ii) reducing the U.S. federal corporate income tax rate from 35% to 21%; (iii) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (iv) creating a new limitation on deductible interest expense; (v) changing rules related to use and limitations of NOL carryforwards created in tax years beginning after December 31, 2017 and (vi) repeal of the corporate alternative minimum tax (“AMT”).

On that same date, the SEC staff also issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the TCJA. SAB 118 provides a measurement period that should not extend beyond one year from the TCJA enactment date for companies to complete the accounting under the FASB’s Accounting Standards Codification (“ASC”) 740, Income Taxes (“ASC 740”). In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the TCJA for which accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the TCJA is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimated in the financial statements. If the Company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the TCJA.

In connection with our initial analysis of the impact of the TCJA, we recorded income tax charge of $86.6 million for the year ended December 31, 2017, which consists of a reduction of deferred tax assets previously valued at 35%. We recorded a corresponding decrease in our deferred tax asset valuation allowance representing an income tax benefit for the same amount. The reduction in the statutory U.S. federal rate is expected to positively impact the Company’s future US after tax earnings. As a result of the repeal of the AMT, we anticipate that our existing AMT credit carryovers will become refundable beginning with the 2018 tax year. The AMT credit carryforwards will be used to offset current year regular tax liabilities with 50 percent of any excess remaining credit per year being refundable as part of the annual income tax filing. We anticipate full utilization of the AMT credit carryforwards by 2021.

In addition to the aforementioned offsetting items with respect to the reduction in income tax rates, our income tax provision includes federal income taxes of $9.7 million applied at the statutory rate of 35% for 2017 and an adjustment of $10.8 million attributable to reductions in certain tax attributes of property and other adjustments of $0.3 million applied in connection with the filing of our 2016 income tax returns. These expenses were effectively offset by benefits attributable to the reduction in our deferred tax asset valuation allowance of $24.3 million and state income tax benefits of $1.4 million resulting in a net tax deferred benefit of $4.9 million. The tax benefit and the corresponding net deferred tax asset presented on our Consolidated Balance Sheet as of December 31, 2017 are exclusively attributable to the AMT credit carryforwards and the deferred tax asset effectively represent a noncurrent receivable of AMT credits to be applied in the future.

As of December 31, 2017, we had federal NOL carryforwards of approximately $385.7 million, which, if not utilized, expire between 2032 and 2037, and state NOL carryforwards of approximately $446.7 million, which expire between 2024 and 2037. Because of the change in ownership provisions of the Tax Reform Act of 1986, use of a portion of our federal and state NOL may be limited in future periods. As of December 31, 2017, we carried a valuation allowance against our federal and state deferred tax assets of $177.5 million. We incurred pre-tax income in 2017 which, when aggregated with the prior two years, resulted in a pre-tax loss for the three year period ended December 31, 2017. We considered both the positive and negative evidence in determining whether it was more likely than not that some portion or all of our deferred tax assets will be realized. Due to the TCJA, we are eligible for a full refund of our AMT credit carryforwards beginning with the tax year ended December 31, 2018. As noted above, the provision for the year ended December 31, 2017 includes a benefit of $4.9 million for deferred tax assets attributable to the AMT carryforwards while the valuation allowance related to other net deferred tax assets remains in full. The amount of deferred tax asset considered realizable could, however, be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth.

We had no liability for unrecognized tax benefits as of December 31, 2017 and 2016. There were no interest and penalty charges recognized during the years ended December 31, 2017, 2016 and 2015. Tax years from 2013 forward remain open for examination by the Internal Revenue Service and various state jurisdictions.