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Income Taxes
 12 Months Ended
Aug. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes    CHS is a nonexempt agricultural cooperative and files a consolidated federal income tax return within our tax return period. We are subject to tax on income from nonpatronage sources, nonqualified patronage distributions and undistributed patronage-sourced income. Income tax (benefit) expense is primarily the current tax payable for the period and the change during the period in certain deferred tax assets and liabilities. Deferred income taxes reflect the impact of temporary differences between the amounts of assets and liabilities recognized under U.S. GAAP and such amounts recognized for federal and state income tax purposes, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income.
The (benefit from) provision for income taxes for the years ended August 31, 2021, 2020 and 2019 is as follows:
202120202019
 (Dollars in thousands)
Current:
Federal$(533)$4,519 $211 
State2,943 (2,231)3,815 
Foreign56 2,748 (2,630)
Total Current2,466 5,036 1,396 
Deferred:
Federal(24,676)(36,231)(4,923)
State(15,666)(5,263)(8,491)
Foreign(373)(273)(438)
Total Deferred(40,715)(41,767)(13,852)
Total$(38,249)$(36,731)$(12,456)

    Domestic income before income taxes was $497.5 million, $324.4 million and $825.7 million for the years ended August 31, 2021, 2020 and 2019, respectively. Foreign income (loss) before income taxes was $17.8 million, $62.5 million and ($3.1) million for the years ended August 31, 2021, 2020 and 2019, respectively.

    Deferred taxes are comprised of basis differences related to investments, accrued liabilities and certain federal and state tax credits. Deferred tax assets and liabilities as of August 31, 2021 and 2020, are as follows:
20212020
 (Dollars in thousands)
Deferred tax assets:  
Accrued expenses$57,245 $51,560 
Postretirement health care and deferred compensation42,217 42,898 
Tax credit carryforwards128,824 123,193 
Loss carryforwards115,327 116,741 
Nonqualified equity391,309 344,924 
Lease obligations62,770 64,140 
Other92,325 85,856 
Deferred tax assets valuation allowance(208,810)(219,891)
Total deferred tax assets681,207 609,421 
Deferred tax liabilities:  
Pension24,277 17,131 
Investments110,910 95,916 
Property, plant and equipment557,129 556,160 
Right of use assets61,870 64,140 
Other28,549 15,417 
Total deferred tax liabilities782,735 748,764 
Net deferred tax liabilities$101,528 $139,343 

    We have total gross loss carryforwards of $527.5 million, as of August 31, 2021, of which $304.4 million will expire over periods ranging from fiscal 2022 to fiscal 2042. The remainder will carry forward indefinitely. Based on estimates of future taxable profits and losses in certain foreign tax jurisdictions, as well as consideration of other factors, we assessed whether a valuation allowance was necessary to reduce specific foreign loss carryforwards to amounts we believe are more likely than not to be realized as of August 31, 2021. If our estimates prove inaccurate, adjustments to the valuation allowances may be required in the future with gains or losses being charged to income in the period such determination is made. McPherson refinery's gross state tax credit carryforwards for income tax were approximately $129.7 million and $125.5 million
as of August 31, 2021 and 2020, respectively. McPherson refinery's valuation allowance on Kansas state credits is necessary due to the limited amount of taxable income generated in Kansas by the combined group on an annual basis.

    Our general business credits of $44.1 million, comprised primarily of low-sulfur diesel credits, will begin to expire on August 31, 2027, and our state tax credits of $129.7 million will begin to expire on August 31, 2022.

    The reconciliation of the statutory federal income tax rates to the effective tax rates for the years ended August 31, 2021, 2020 and 2019 is as follows:
202120202019
Statutory federal income tax rate21.0 %21.0 %21.0 %
State and local income taxes, net of federal income tax benefit(2.6)(1.8)(0.7)
Patronage earnings(11.4)(13.1)(14.3)
Domestic production activities deduction(8.2)(19.0)(9.9)
Export activities at rates other than the U.S. statutory rate0.5 1.8 (2.1)
Intercompany transfer of business assets(4.7)(1.6)— 
Increase in unrecognized tax benefits0.8 4.2 0.2 
Valuation allowance(0.2)(1.0)2.6 
Tax credits— 0.2 0.4 
Other(2.6)(0.2)1.3 
Effective tax rate(7.4)%(9.5)%(1.5)%

Primary drivers of the fiscal 2021 income tax benefit were retaining the current Domestic Production Activities Deduction ("DPAD") benefit and from tax planning associated with certain assets. Primary drivers of the fiscal 2020 income tax benefit were retaining the current DPAD benefit and the settlement of a U.S. federal audit, resulting in additional tax credit carryovers, which were partially offset by an increase in our uncertain tax position. Primary drivers of the fiscal 2019 income tax benefit were retaining the current DPAD benefit and deducting previously disallowed DPAD available from the carryback of excise tax credits, which were partially offset by an increase in our unrecognized deferred tax benefit.

We file income tax returns in the U.S. federal jurisdiction, as well as various state and foreign jurisdictions. Our uncertain tax positions are affected by the tax years that are under audit or remain subject to examination by the relevant taxing authorities. In addition to the current year, fiscal 2007 through 2020 remain subject to examination for certain issues.

Reserves are recorded against unrecognized tax benefits when we believe certain fully supportable tax return positions are likely to be challenged and we may or may not prevail. If we determine that a tax position is more likely than not to be sustained upon audit, based on the technical merits of the position, we recognize the benefit by measuring the amount that is greater than 50% likely of being realized. We reevaluate the technical merits of our tax positions and recognize an uncertain tax benefit, or derecognize a previously recorded tax benefit, when there is (i) completion of a tax audit, (ii) effective settlement of an issue, (iii) a change in applicable tax law including a tax case or legislative guidance, or (iv) expiration of the applicable statute of limitations. Significant judgment is required in accounting for tax reserves. A reconciliation of the gross beginning and ending amounts of unrecognized tax benefits for the periods presented follows:
202120202019
 (Dollars in thousands)
Balance at beginning of period$119,150 $101,128 $91,135 
Additions attributable to current year tax positions2,000 14,410 14,162 
Additions attributable to prior year tax positions15,974 6,128 — 
Reductions attributable to prior year tax positions(14,975)(2,516)(4,169)
Balance at end of period$122,149 $119,150 $101,128 

    If we were to prevail on all positions taken in relation to uncertain tax positions, $114.3 million of the unrecognized tax benefits would ultimately benefit our effective tax rate. It is reasonably possible that the total amount of unrecognized tax benefits could significantly change in the next 12 months.
    We recognize interest and penalties related to unrecognized tax benefits in our provision for income taxes. We recognized benefits of $1.4 million and $1.0 million and expense of $1.7 million for interest and penalties related to unrecognized tax benefits in our Consolidated Statements of Operations for the years ended August 31, 2021, 2020 and 2019, respectively, and a related $2.5 million, $1.0 million and $2.9 million interest payable on our Consolidated Balance Sheets as of August 31, 2021, 2020 and 2019, respectively.