Income Taxes

(Loss) income before income taxes consists of the following components:



	Successor						Predecessor
(amounts in thousands)	Year Ended December 31, 2016			August 1, 2015 Through December 31, 2015			January 1, 2015 Through July 31, 2015			Year Ended December 31, 2014
Domestic	$	(111,056	)	$	(34,139	)	$	29,053		$	122,347
Foreign	12,516			470			(32,261		)	(53,091		)
Total	$	(98,540	)	$	(33,669	)	$	(3,208	)	$	69,256

Significant components of income taxes are as follows:



	Successor						Predecessor
(amounts in thousands)	Year Ended December 31, 2016			August 1, 2015 Through December 31, 2015			January 1, 2015 Through July 31, 2015			Year Ended December 31, 2014
Currently payable:
Federal	$	—		$	—		$	14,370		$	49,918
State and Local	(1		)	8			305			1,085
Foreign	(771		)	646			392			135
Total currently payable	(772		)	654			15,067			51,138

Deferred:
Federal	10,073			(18,308		)	(4,115		)	(7,808		)
State and Local	(482		)	(789		)	(57		)	(110		)
Foreign	4,201			(789		)	(46		)	(1,821		)
Total deferred	13,792			(19,886		)	(4,218		)	(9,739		)
Provision (benefit) for income taxes	$	13,020		$	(19,232	)	$	10,849		$	41,399

A reconciliation of income tax expense at the U.S. Federal statutory income tax rate to actual income tax provision is as follows:



	Successor						Predecessor
(amounts in thousands)	Year Ended December 31, 2016			August 1, 2015 Through December 31, 2015			January 1, 2015 Through July 31, 2015			Year Ended December 31, 2014
Tax at Statutory Rate	$	(34,490	)	$	(11,785	)	$	(1,123	)	$	24,240
State income taxes, net of federal tax benefit	(313		)	(508		)	141			596
Effect of Foreign Items	(788		)	(411		)	2,315			4,017
Goodwill impairment	21,831			—			—			—
Valuation Allowance	28,466			(2,004		)	9,321			12,878
Tax Incentives	(82		)	(34		)	—			(332		)
Warrants	(1,722		)	(4,557		)	—			—
Other	118			67			195			—
Provision (benefit) for income taxes	$	13,020		$	(19,232	)	$	10,849		$	41,399

Income tax expense for the twelve months ended December 31, 2016, five months ended December 31, 2015, seven months ended July 31, 2015, and twelve months ended December 31, 2014 include certain discrete tax items for changes in valuation allowances, non-deductible U.S. goodwill impairment, foreign effective rate items and other rate modifying items.

For the year ended December 31, 2016, the Company recorded a tax benefit of $1.7 million for the non-taxable marked to market gains from Private Placement Warrants. In addition, the Company recorded an income tax expense of $28.5 million for the increase in valuation allowances for certain tax attributes, including net operating losses. The increase in valuation allowance occurred in the quarter ended December 31, 2016, following the Company's assessment that it will not be able to realize its deferred tax assets in the U.S. in the time horizon required by U.S. GAAP to carry them as assets. During the quarter ended December 31, 2016, the Company impaired its goodwill asset resulting in a permanent item of $21.8 million, as the impairment is not deductible for tax purposes.

The tax rate for the five months ended December 31, 2015, was unfavorably impacted by the non-taxable marked to market gains from Private Placement Warrants of $4.6 million in the U.S. and by the release of the valuation allowance in the U.S. of $2.0 million.

The tax rate for the seven months ended July 31, 2015 was unfavorably impacted by the increase of valuation allowances of $9.3 million primarily in Canada and South Africa and by losses in multiple foreign jurisdictions with tax rates less than 35% of $2.3 million.

The tax rate for 2014 was unfavorably impacted by the increase of valuation allowances of $12.9 million primarily in Australia, Brazil, and France and by losses in multiple foreign jurisdictions with tax rates less than 35% of $4.0 million.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at December 31, 2016 and December 31, 2015 are as follows:



(amounts in thousands)	December 31, 2016			December 31, 2015
Deferred tax assets:
Intangible assets other than goodwill	$	5,208		$	3,788
Pension and other retiree obligations	547			425
Inventory	46			2,070
Other accruals and reserves	2,546			1,132
Loss and credit carryforwards	27,682			12,991
Other	952			816
Valuation allowance	(27,732		)	(9,111		)
Deferred tax assets	9,249			12,111

Deferred tax liabilities:
Intangible assets other than goodwill	—			—
Property, plant and equipment	(790		)	(118		)
Deferred tax liabilities	(790		)	(118		)
Net deferred tax assets / (liabilities)	$	8,459		$	11,993

The Company makes significant judgments regarding the realizability of its deferred tax assets (principally net operating losses). The carrying value of deferred tax assets is based on the Company’s assessment that it is more likely than not that the Company will realize these assets after consideration of all available positive and negative evidence.

Gross operating loss carryforwards amounted to $2.6 million for foreign jurisdictions, $75.4 million for U.S. federal, and $5.1 million for U.S. States at December 31, 2016. These operating loss carryforwards related to the 2014, 2015 and current 2016 tax periods. At December 31, 2016, none of the operating loss carryforwards were subject to expiration in 2016 through 2019. The operating loss carryforwards expiring in years 2020 through 2026 make up $0.4 million of the recorded deferred tax asset. The operating loss carryforwards expiring in years 2030 through 2036 make up $0.2 million of the recorded deferred tax asset. The remaining deferred tax asset relating to operating loss carryforwards of $0.3 million have an indefinite expiration. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets.

As of December 31, 2016, management determined that sufficient negative evidence exists to conclude that it is more-likely-than-not that the net deferred income tax assets in the U.S. and Poland, are not realizable, and therefore, increased the valuation allowance accordingly.

There are tax credits in the U.S. for foreign taxes and research and development expenditures that were created in both 2015 and 2016. These credits are $0.1 million and $0.1 million, respectively. They will expire beginning in 2025 and 2035, respectively.

U.S. income and foreign withholding taxes have not been recognized on the excess of the amount for financial reporting over the tax basis of the investments in foreign subsidiaries that is indefinitely reinvested outside the United States. This amount becomes taxable upon a repatriation of assets from the subsidiary or a sale or liquidation of the subsidiary. There is not a gross temporary difference as of December 31, 2016, since the tax basis of investments in foreign subsidiaries is in excess of the financial reporting basis.

Uncertain Tax Positions

Interest and penalties associated with uncertain tax positions are recognized as components of the “Provision for income taxes.” For the period ended December 31, 2016, no uncertain income tax positions were identified and no uncertain income tax positions were identified in related prior years.