XML 45 R21.htm IDEA: XBRL DOCUMENT v3.8.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
12 Months Ended
Dec. 31, 2017
Accounting Policies [Abstract]  
Consolidation
Consolidation
The accompanying consolidated financial statements include the accounts of NuStar GP Holdings and subsidiaries in which it has a controlling interest. Intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. On an ongoing basis, management reviews its estimates based on currently available information. Management may revise estimates due to changes in facts and circumstances.

Cash and Cash Equivalents
Cash and Cash Equivalents
Cash equivalents are all highly liquid investments with an original maturity of three months or less when acquired.
Investment in NuStar Energy
Investment in NuStar Energy
We account for our investment in NuStar Energy using the equity method. As the general partner, we exercise significant influence over NuStar Energy. We evaluate our investment in NuStar Energy for impairment when there is evidence that we may not be able to recover the carrying amount of our investment or that the investee is unable to sustain an earnings capacity that justifies the carrying amount. If a decline in the value of our investment is determined to be other than temporary, then we would record an impairment loss in the current period based on the difference between the estimated current fair value of the investment and our carrying amount. We believe that the carrying amount of our investment in NuStar Energy as of December 31, 2017 is recoverable.

Accounting for Issuances of Units by NuStar Energy
Accounting for Issuances of Units by NuStar Energy
We account for issuances of common units by NuStar Energy as if we had sold a proportionate share of our investment, such that we record any gain or loss in earnings.

Income Taxes
Income Taxes
We are a limited liability company taxed as a partnership and generally are not subject to federal or state income taxes. Accordingly, our taxable income or loss, which may vary substantially from income or loss reported for financial reporting purposes, is generally included in the federal and state income tax returns of our unitholders. For transfers of publicly held units subsequent to our initial public offering, we have made an election permitted by Section 754 of the Internal Revenue Code (the Code) to adjust the common unit purchaser’s tax basis in our underlying assets to reflect the purchase price of the units. This results in an allocation of taxable income and expenses to the purchaser of the common units, including depreciation deductions and gains and losses on sales of assets, based upon the new unitholder’s purchase price for the common units.

On August 14, 2006, NuStar GP, LLC, our wholly owned subsidiary, elected to be treated as a corporation for federal income tax purposes under Treasury Regulation §301.7701-3(a). We account for income taxes under the asset and liability method. Under this method, we recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We measure deferred taxes using enacted tax rates expected to apply to taxable income in the year those temporary differences are expected to be recovered or settled.

Income tax expense includes federal and state income and withholding taxes currently payable and deferred federal and state income taxes resulting from temporary differences between financial statement and tax bases of assets and liabilities when such differences exist. We, or certain of our subsidiaries, file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. For U.S. federal and state purposes, tax years subject to examination are 2013 through 2016, according to standard statutes of limitations.

We recognize a tax position if it is more likely than not that the tax position will be sustained, based on the technical merits of the position, upon examination. We record uncertain tax positions in the financial statements at the largest amount of benefit that is more likely than not to be realized. We had no unrecognized tax benefits as of December 31, 2017 and 2016.
Net Income Per Common Unit
Net Income Per Common Unit
Net income per common unit is determined pursuant to the two-class method. Under this method, all earnings are allocated to our common units and participating securities based on their respective rights to receive distributions earned during the period. Participating securities include restricted units awarded under our long-term incentive plan. Net income attributable to distribution equivalent rights for outstanding restricted units totaled $0.2 million for the years ending December 31, 2017 and 2016. We compute net income per common unit by dividing net income attributable to our common units by the weighted-average number of common units outstanding during the period. Basic and diluted net income per common unit are the same as we have no potentially dilutive securities outstanding.
Unit-Based Compensation
Unit-Based Compensation
We account for awards of NSH restricted units granted to employees of NuStar GP, LLC and our directors based on the fair value of the awards at the grant date. Compensation expense for NSH restricted units is recognized ratably over the vesting period based on the initial fair value determination, and is included in “General and administrative expenses” on our consolidated statements of comprehensive income.

Prior to the Employee Transfer, we accounted for awards of NS performance units and restricted units to employees and directors of NuStar GP, LLC and its affiliates at fair value, whereby a liability for the award was initially recorded and subsequent changes in the fair value were included in the determination of net income. The fair value of NS restricted units and performance units equaled the market price of NS common units at each reporting date. However, NS performance units were earned only upon NuStar Energy’s achievement of an objective performance measure. We recorded compensation expense each reporting period such that the cumulative compensation expense equaled the portion of the award’s current fair value that had vested. We recorded compensation expense related to NS restricted units and performance units until the date of vesting. Prior to the Employee Transfer, we recorded a liability on our consolidated balance sheet for awards of NS performance units and restricted units and NuStar Energy reimbursed us for the expenses resulting from NS awards and NSH awards to employees providing services to NuStar Energy. Following the Employee Transfer, NuStar Energy retains the expenses resulting from NS awards and we retain the expenses resulting from NSH awards.

Distribution Equivalent Rights (DERs) paid with respect to outstanding, unvested NS units were expensed, whereas DERs with respect to outstanding, unvested NSH restricted units reduce equity, similar to cash distributions to unitholders. Forfeitures of our unit-based awards are recognized as an adjustment to compensation expense when they occur.