Note 15 —Income Taxes

The components of income (loss) before income taxes for the years ended December 31, 2017, 2018, and 2019 are as follows (in thousands):


	2017		2018		2019
U.S.	$	(44,535)	$	(9,153)	$	14,981
Foreign		(38,770)		311		(864)
Total income (loss) before income taxes	$	(83,305)	$	(8,842)	$	14,117

The provision for income taxes for the years ended December 31, 2017, 2018, and 2019 consists of the following (in thousands):


	2017		2018		2019
Current:
Federal	$	31	$	—	$	—
State		231		341		116
Foreign		224		—		4
Total current		486		341		120
Deferred:
Federal		(978)		—		293
State		(184)		—		445
Foreign		(1,238)		—		—
Total deferred		(2,400)		—		738
Total expense (benefit)	$	(1,914)	$	341	$	858

The Company’s federal and state tax benefit from the utilization of net operating loss carryovers for the year ended December 31, 2017 was $6.9 million and $1.5 million, respectively. Income tax expense (benefit) for the years ended December 31, 2017, 2018, and 2019 differs from the “expected” amount computed using the federal income tax rate of 35% as of December 31, 2017 and 21% as of December 31, 2018 and 2019 as a result of the following (in thousands):


	2017		2018		2019
Computed expected tax (benefit)	$	(29,157)	$	(1,857)	$	2,964
Nondeductible expenses		13,420		5,674		3,087
Tax rate differential on foreign earnings		11,860		(56)		245
Joint ventures		—		947		(369)
Noncontrolling interest		—		1,133		4,114
Impact of federal income tax rate change		59,729		—		—
Tax credits		(27)		(6,603)		(10,314)
Other		2,376		985		665
Change in valuation allowance		(60,115)		118		466
Total tax expense (benefit)	$	(1,914)	$	341	$	858

On December 21, 2017, the TCJA was enacted. Among other things, the TCJA reduces the U.S. federal corporate tax rate from 35 percent to 21 percent beginning on January 1, 2018, requires companies to pay a one-time transition tax on certain previously unremitted earnings of non-U.S. subsidiaries, creates new taxes on certain foreign sourced earnings and imposes additional limitations on certain deductions, including interest expense and net operating losses arising after 2017. The Company has assessed the impact of the TCJA and is not subject to the one-time transition tax. The Company remeasured certain deferred tax assets and liabilities and uncertain tax positions based on the rates at which they are expected to reverse in the future, which is generally 21 percent under the TCJA. The decrease in the Company’s net deferred tax assets as of December 31, 2017 was offset by a corresponding decrease in its valuation allowance.

The AFTC, which had previously expired on December 31, 2016, was reinstated on February 9, 2018 to apply to vehicle fuel sales made from January 1, 2017 through December 31, 2017. As a result, all AFTC revenue for vehicle fuel the Company sold in the 2017 calendar year was recognized and collected during the year ended December 31, 2018. On December 20, 2019, AFTC was retroactively extended beginning January 1, 2018 through December 31, 2020. As a result, all AFTC revenue for vehicle fuel the Company sold in the 2018 and 2019 calendar year was recognized during the year ended December 31, 2019.

The Company recorded a federal tax benefit of $0.0 million, $6.1 million and $10.5 million related to the exclusion of AFTC associated with 2017, 2018 and 2019 fuel sales in excess of its fuel tax obligation, respectively. These amounts increased the Company’s deferred tax asset attributed to its federal net operating loss carryforwards and the Company’s deferred tax asset valuation allowance.

Deferred tax assets and liabilities result from differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The tax effect of temporary differences that give rise to deferred tax assets and liabilities as of December 31, 2018 and 2019 are as follows (in thousands):


	2018		2019
Deferred tax assets:
Accrued expenses	$	5,254	$	4,899
Alternative minimum tax and general business credits		6,801		6,651
Stock option expense		11,210		9,254
Other		1,998		1,456
Loss carryforwards		106,957		107,722
Total deferred tax assets		132,220		129,982
Less valuation allowance		(120,801)		(122,147)
Net deferred tax assets		11,419		7,835
Deferred tax liabilities:
Commodity swap contracts		(2,751)		(998)
Depreciation and amortization		(2,672)		(911)
Goodwill		(1,650)		(1,910)
Investments in joint ventures and partnerships		(4,346)		(4,754)
Total deferred tax liabilities		(11,419)		(8,573)
Net deferred tax liabilities	$	—	$	(738)

As of December 31, 2019, the Company had federal, state and foreign net operating loss carryforwards of approximately $430.2 million, $298.3 million and $2.0 million, respectively. The Company’s federal, state and foreign net operating loss carryforwards will, if not utilized, expire beginning in 2026, 2020 and 2030, respectively. The Company also has federal tax credit carryforwards of $6.4 million that will expire beginning in 2026. Due to the change of ownership provisions of Internal Revenue Code Section 382, utilization of a portion of the Company’s net operating loss and tax credit carryforwards may be limited in future periods.

In assessing the realizability of the net deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers projected future taxable income and tax planning strategies in making this assessment. As of December 31, 2018 and 2019, the Company provided a valuation allowance of $120.8 million, and $122.1 million, respectively, to reduce the net deferred tax assets due to uncertainty surrounding the realizability of these assets. The decrease in the valuation allowance for the year ended December 31, 2018 of $0.0 million was primarily attributable to the valuation allowance offsetting foreign income, partially offset by an increase in federal losses without benefit. The increase in the valuation allowance for the year ended December 31, 2019 of $1.3 million was primarily attributable to an increase in federal losses without benefit.

For the year ended December 31, 2019, the Company did not have any offshore earnings of certain non-U.S. subsidiaries which are permanently reinvested outside the United States.

The Company does not recognize the impact of a tax position in its financial statements unless the position is more likely than not to be sustained, based on the technical merits of the position. The Company has unrecognized tax benefits of $41.5 million as of December 31, 2019 that, if recognized, would not result in a tax benefit since it would be fully offset with a valuation allowance.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the years ended December 31, 2017, 2018, and 2019 (in thousands):


Unrecognized tax benefit—December 31, 2017	$	34,065
Gross increases—tax positions in current year		2,178
Unrecognized tax benefit—December 31, 2018		36,243
Gross increases—tax positions in current year		5,232
Unrecognized tax benefit—December 31, 2019	$	41,475

The increase in the Company’s unrecognized tax benefits in the years ended December 31, 2018 and 2019 is primarily attributable to the portion of AFTC offset by the fuel tax the Company collected from its customers.

ASC 740, Income Taxes, requires the Company to accrue interest and penalties where there is an underpayment of taxes based on the Company’s best estimate of the amount ultimately to be paid. The Company’s policy is to recognize interest accrued related to unrecognized tax benefits and penalties as income tax expense. In addition to the unrecognized tax benefits noted above, the Company accrued $0.0 million of interest expense as of December 31, 2018 and 2019. The Company recognized interest expense related to uncertain tax positions of $0.1 million, $0.0 million and $0.0 million for the years ended December 31, 2017, 2018, and 2019, respectively.

During the year ended December 31, 2018, the IRS concluded its examination of the Company’s U.S. federal income tax returns for the year ended December 31, 2015 and did not propose any significant adjustments to the Company’s tax positions.

The Company is subject to taxation in the United States and various states and foreign jurisdictions. The Company’s tax years for 2015 through 2019 are subject to examination by various tax authorities. While the Company is no longer subject to U.S. examination for years before 2016, and for state tax examinations for years before 2015, taxing authorities can adjust the net operating losses that arose in earlier years if and when the net operating losses reduce future income. In addition, the Company is required to indemnify SAFE&CEC S.r.l. for taxes that are imposed on CEC for pre-contribution tax periods.

A number of years may elapse before an uncertain tax position is finally resolved. It is often difficult to predict the final outcome or the timing of resolution of an uncertain tax position, but the Company believes that its reserves for income taxes reflect the most probable outcomes. The Company adjusts the reserve, as well as the related interest and penalties, in light of changing facts and circumstances. The amount of penalties accrued is immaterial. Settlement of any particular position would usually require the use of cash and result in the reduction of the related reserve, or there could be a change in the amount of the Company’s net operating loss. The resolution of a matter would be recognized as an adjustment to the provision for income taxes at the effective tax rate in the period of resolution. The Company does not expect a significant increase or decrease in its uncertain tax positions within the next twelve months.