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Income Taxes
 12 Months Ended
Aug. 31, 2022
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 expense (benefit) 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 provision for (benefit from) income taxes for the years ended August 31, 2022, 2021 and 2020 is as follows:
202220212020
 (Dollars in thousands)
Current:
Federal$56,582 $(533)$4,519 
State24,224 2,943 (2,231)
Foreign9,833 56 2,748 
Total Current90,639 2,466 5,036 
Deferred:
Federal41,710 (24,676)(36,231)
State491 (15,666)(5,263)
Foreign(724)(373)(273)
Total Deferred41,477 (40,715)(41,767)
Total$132,116 $(38,249)$(36,731)
    Domestic income before income taxes was $1.8 billion, $497.5 million and $324.4 million for the years ended August 31, 2022, 2021 and 2020, respectively. Foreign (loss) income before income taxes was ($4.9) million, $17.8 million and $62.5 million for the years ended August 31, 2022, 2021 and 2020, 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, 2022 and 2021, are as follows:
20222021
 (Dollars in thousands)
Deferred tax assets:  
Accrued expenses$61,843 $57,245 
Postretirement health care and deferred compensation46,008 42,217 
Tax credit carryforwards101,457 128,824 
Loss carryforwards110,018 115,327 
Nonqualified equity424,869 391,309 
Lease obligations60,329 62,770 
Other95,027 92,325 
Deferred tax assets valuation allowance(189,685)(208,810)
Total deferred tax assets709,866 681,207 
Deferred tax liabilities:  
Pension costs14,600 24,277 
Investments169,970 110,910 
Property, plant and equipment605,463 557,129 
Lease right of use assets58,852 61,870 
Other— 28,549 
Total deferred tax liabilities848,885 782,735 
Net deferred tax liabilities$139,019 $101,528 

    We had total gross loss carryforwards of $500.2 million, as of August 31, 2022, of which $242.4 million will expire over periods ranging from fiscal 2023 to fiscal 2043. 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, 2022. 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 $122.8 million and $129.7 million as of August 31, 2022 and 2021, respectively. Our 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 state tax credits of $122.8 million will begin to expire on August 31, 2023.
    The reconciliation of the statutory federal income tax rates to the effective tax rates for the years ended August 31, 2022, 2021 and 2020 is as follows:
202220212020
Statutory federal income tax rate21.0 %21.0 %21.0 %
State and local income taxes, net of federal income tax benefit1.1 (2.6)(1.8)
Patronage earnings(13.6)(11.4)(13.1)
Domestic production activities deduction(3.2)(8.2)(19.0)
Export activities at rates other than the U.S. statutory rate0.4 0.5 1.8 
Intercompany transfer of business assets(0.1)(4.7)(1.6)
Increase in unrecognized tax benefits— 0.8 4.2 
Valuation allowance0.2 (0.2)(1.0)
Tax credits— — 0.2 
Other1.5 (2.6)(0.2)
Effective tax rate7.3 %(7.4)%(9.5)%

Primary drivers of the fiscal 2022 income tax expense were increased nonpatronage earnings and other nondeductible items, which are partially offset by the current Domestic Production Activities Deduction ("DPAD") benefit during fiscal 2022. Primary drivers of the fiscal 2021 income tax benefit were retaining the current 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.

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. We are currently under examination for fiscal years 2016 through 2019. Fiscal years 2007 through 2015 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:
202220212020
 (Dollars in thousands)
Balance at beginning of period$122,149 $119,150 $101,128 
Additions attributable to current year tax positions— 2,000 14,410 
Additions attributable to prior year tax positions2,810 15,974 6,128 
Reductions attributable to prior year tax positions— (14,975)(2,516)
Balance at end of period$124,959 $122,149 $119,150 

    If we were to prevail on all positions taken in relation to uncertain tax positions, $115.1 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 $0.7 million and $1.4 million and expense of $1.0 million for interest and penalties related to unrecognized tax benefits in our Consolidated Statements of Operations for the years ended August 31, 2022, 2021 and 2020, respectively, and a related $3.3 million and $2.5 million interest payable on our Consolidated Balance Sheets as of August 31, 2022 and 2021, respectively.