INCOME TAXES.

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

11. INCOME TAXES.

The Company recorded a provision (benefit) for income taxes as follows (in thousands):

	Years Ended December 31,
	2019			2018
Current provision (benefit)	$	(22	)	$	(589	)
Deferred provision (benefit)		2			27
Total	$	(20	)	$	(562	)

A reconciliation of the differences between the United States statutory federal income tax rate and the effective tax rate as provided in the consolidated statements of operations is as follows:

	Years Ended December 31,
	2019			2018
Statutory rate		21.0	%		21.0	%
State income taxes, net of federal benefit		5.7			5.4
Change in valuation allowance		(22.4	)		(20.3	)
Noncontrolling interest		(3.3	)		(3.0	)
Non-deductible items		(0.1	)		(0.7	)
Other		(1.0	)		(1.6	)
Effective rate		(0.1	)%		0.8	%

Deferred income taxes are provided using the asset and liability method to reflect temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities using presently enacted tax rates and laws. The components of deferred income taxes included in the consolidated balance sheets were as follows (in thousands):

	December 31,
	2019			2018
Deferred tax assets:
Net operating loss carryforwards	$	61,775		$	48,082
R&D, Energy and AMT credits		3,864			4,247
Disallowed interest		8,242			3,769
Railcar contracts		379			650
Stock-based compensation		551			782
Allowance for doubtful accounts and other assets		578			643
Derivatives		—			1,214
Pension liability		2,979			2,941
Property and equipment		3,325			—
Other		3,458			2,134
Total deferred tax assets		85,151			64,462
Deferred tax liabilities:
Property and equipment		—			(23,013	)
Intangibles		(749	)		(749	)
Derivatives		(153	)		—
Other		(437	)		(363	)
Total deferred tax liabilities		(1,339	)		(24,125	)
Valuation allowance		(84,065	)		(40,588	)
Net deferred tax liabilities, included in other liabilities	$	(253	)	$	(251	)

A portion of the Company's net operating loss carryforwards are subject to provisions of the tax law that limits the use of losses incurred by a corporation prior to the date certain ownership changes occur. These limitations also apply to certain depreciation deductions associated with assets on hand at the time of the ownership change and otherwise allowable during the five-year period following the ownership change. As the five-year limitation period lapsed in 2019, these disallowed deductions are reflected in property and equipment in the schedule above but continue to be subject to the annual limitation that applies to the pre-change net operating losses. Due to the limitation on the use of net operating losses and deprecation deductions, a significant portion of these carryforwards will expire regardless of whether the Company generates future taxable income. After reducing these net operating loss carryforwards for the amount which will expire due to this limitation, the Company had remaining federal net operating loss carryforwards of approximately $228,837,000 and state net operating loss carryforwards of approximately $216,265,000 at December 31, 2019. These net operating loss carryforwards expire as follows (in thousands):

Tax Years	Federal		State
2020–2024	$	—	$	—
2025–2029		13,781		28,993
2030–2034		101,576		35,238
2035 and after		41,942		152,034
Non-expiring NOLs		71,538		—
Total NOLs	$	228,837	$	216,265

Certain of these net operating losses are not immediately available, but become available to be utilized in each of the years ended December 31, as follows (in thousands):

Year	Federal		State
2020	$	146,738	$	169,539
2021		6,308		5,318
2022		6,308		5,318
2023		6,308		5,318
2024		6,308		5,135

To the extent amounts are not utilized in any year, they may be carried forward to the next year until expiration. These amounts may change if there are future additional limitations on their utilization.

In assessing whether the deferred tax assets are realizable, a more likely than not standard is applied. If it is determined that it is more likely than not that deferred tax assets will not be realized, a valuation allowance must be established against the deferred tax assets. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the associated temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

A valuation allowance was established in the amount of $84,065,000 and $40,588,000 as of December 31, 2019 and 2018, respectively, based on the Company's assessment of the future realizability of certain deferred tax assets. The valuation allowance on deferred tax assets is related to future deductible temporary differences and net operating loss carryforwards for which the Company has concluded it is more likely than not that these items will not be realized in the ordinary course of operations.

For the year ended December 31, 2019, the Company recorded an increase in valuation allowance of $43,477,000. Of this increase, $22,641,000 was primarily the offsetting impact of an increase in deferred tax assets associated with additional net operating losses in 2019. The remaining increase of $20,836,000 relates to a deferred asset related to previously disallowed depreciation discussed above. For the year ended December 31, 2018, the Company recorded an increase in the valuation allowance of $15,949,000. This increase was primarily the offsetting impact of an increase in deferred tax assets associated with additional net operating losses in 2018.

At December 31, 2018, the Company accrued $235,000 in tax uncertainties related to a refund claim. There was no accrued interest or penalties relating to tax uncertainties at December 31, 2019.

The Tax Cuts and Jobs Act ("TCJA") was enacted on December 22, 2017. The Company recognized the income tax effects of the TCJA in its 2017 financial statements in accordance with Staff Accounting Bulletin No. 118, which provides SEC staff guidance for the application of ASC Topic 740, Income Taxes, in the reporting period in which the TCJA was signed into law. The Company did not identify items for which the income tax effects of the TCJA was not completed as of December 31, 2017.

Amounts recorded where accounting was complete principally related to the reduction in the U.S. corporate income tax rate to 21%. This resulted in the Company reporting an income tax benefit of $321,000 as the deferred tax liabilities associated with indefinite lived intangible assets were remeasured at the new 21% rate. This rate reduction decreased gross deferred assets by approximately $10,170,000 and valuation allowance by $10,545,000. Absent this deferred tax liability, the Company was in a net deferred tax asset position that is offset by a full valuation allowance, resulting in a net tax effect of zero.

For the year ended December 31, 2018, provisions of Internal Revenue Code Section 163(j), as amended by the TCJA, became effective which now limits the deductibility of interest expense to 30% of adjusted taxable income. The Company recorded a related deferred asset of $8,242,000 and $3,769,000 at December 31, 2019 and 2018, respectively, which has been fully offset by a valuation allowance.

The Company is subject to income tax in the United States federal jurisdiction and various state jurisdictions and has identified its federal tax return and tax returns in state jurisdictions below as "major" tax filings. These jurisdictions, along with the years still open to audit under the applicable statutes of limitation, are as follows:

Jurisdiction	Tax Years
Federal	2016 – 2018
Arizona	2015 – 2018
California	2015 – 2018
Colorado	2014 – 2018
Idaho	2016 – 2018
Illinois	2016 – 2018
Indiana	2016 – 2018
Iowa	2016 – 2018
Kansas	2016 – 2018
Minnesota	2016 – 2018
Missouri	2016 – 2018
Nebraska	2016 – 2018
Oklahoma	2016 – 2018
Oregon	2016 – 2018
Texas	2015 – 2018

However, because the Company had net operating losses and credits carried forward in several of the jurisdictions, including the United States federal and California jurisdictions, certain items attributable to closed tax years are still subject to adjustment by applicable taxing authorities through an adjustment to tax attributes carried forward to open years.