Income Taxes

The provision for income taxes differed from the amount computed by applying the statutory U.S. federal rate of 35% primarily due to the tax impact of equity in earnings, the tax impact of noncontrolling interest and state tax rates (net of federal benefit) in various jurisdictions, most significantly California. All tax expense, other than minimum state tax payments, after the IPO closing date is deferred tax expense and the Partnership has not paid any cash taxes in the period after the IPO closing date covered by these consolidated financial statements.

The Partnership’s financial reporting year-end is November 30 while its tax year-end is December 31. The Partnership has elected to base the tax provision on the financial reporting year; therefore, for example, since the 2017 financial reporting year is December 1, 2016 through November 30, 2017 the taxable income (loss) included in the 2017 tax provision is for the tax year ended December 31, 2016. The provision accrued at the financial reporting year-end will be a discrete period computation, and the tax credits and permanent differences recognized in that accrual will be those generated between the tax year-end date and the financial reporting year-end date. With the exception of minimum state income and franchise tax payments, amounts recorded for income tax provision (benefit) represent deferred income taxes being provided on the net income before taxes of OpCo, a non-taxable partnership, which is allocated to the Partnership.

Although organized as a limited partnership under state law, the Partnership elected to be treated as a corporation for U.S. federal income tax purposes. Accordingly, the Partnership is subject to U.S. federal income taxes at regular corporate rates on its net taxable income, and distributions it makes to holders of its Class A shares will be taxable as ordinary dividend income to the extent of its current and accumulated earnings and profits as computed for U.S. federal income tax purposes.

Income tax expense consists of the following:



	Year Ended						Eleven Months Ended
(in thousands)	November 30, 2017			November 30, 2016			November 30, 2015
Income (loss) before income taxes	$	2,453		$	12,813		$	(20,563	)
Income tax expense:
Current tax expense
Federal	—			—			—
State	(2		)	(2		)	(12		)
Total current tax expense	$	(2	)	$	(2	)	$	(12	)
Deferred tax expense
Federal	$	(5,703	)	$	(18,242	)	$	(10,929	)
State	(882		)	—			(1,562		)
Total deferred tax expense	(6,585		)	(18,242		)	(12,491		)
Income tax expense	$	(6,587	)	$	(18,244	)	$	(12,503	)

For fiscal 2017 and fiscal 2016, the current tax expense is related to minimum state tax payments due and remitted for the tax year ended December 31, 2016 and December 31, 2015, respectively.

The income tax expense differs from the amounts obtained by applying the statutory U.S. federal tax rate to income before taxes as shown below:



	Year Ended						Eleven Months Ended
(in thousands)	November 30, 2017			November 30, 2016			November 30, 2015
Statutory rate (1)	35		%	35		%	35		%
Tax benefit (expense) at U.S. statutory rate	$	(858	)	$	(4,484	)	$	7,197
Noncontrolling interest	(48		)	(9,495		)	(10,201		)
Equity in earnings	(5,392		)	(1,892		)	(893		)
State income taxes	(921		)	(2,331		)	(1,574		)
Return to provision adjustments	132			—			—
Deferred adjustment	462			—			—
Other	38			(42		)	(3		)
Deferred taxes not benefited	—			—			(7,029		)
Total	$	(6,587	)	$	(18,244	)	$	(12,503	)
Effective tax rate	268.5		%	142.4		%	(60.8		)%


(1)	On December 22, 2017, the 2017 Tax Act was signed into law, which enacted major changes to the U.S. federal income tax laws, including a permanent reduction in the U.S. federal corporate income tax rate. Please read “—Note 17—Subsequent Events” for further details.

The income tax effects of temporary differences giving rise to the Partnership's deferred income tax liabilities and assets are as follows:



	Year Ended						Eleven Months Ended
(in thousands)	November 30, 2017			November 30, 2016			November 30, 2015
Deferred tax assets:
Net operating loss carryforwards	$	17,241		$	3,948		$	41
Tax Credits	621			—			—
Total deferred tax assets	17,862			3,948			41
Deferred tax liabilities:
Outside basis difference in partnership	(55,180		)	(34,681		)	(12,544		)
Total deferred tax liabilities	(55,180		)	(34,681		)	(12,544		)
Net deferred tax asset (liability)	$	(37,318	)	$	(30,733	)	$	(12,503	)

At November 30, 2017, the Partnership had federal and aggregate state net operating loss carryforwards of $15.1 million and $2.2 million, respectively. If not used, the federal net operating loss carryforwards will expire beginning in 2035, and the state net operating loss carryforwards will begin to expire in 2035, with the exception of Vermont’s net operating loss carryforwards which will begin expiring in 2025. No valuation allowance was established to offset the net operating loss carryforward since the Partnership expects to fully be able to realize the losses in future years before they expire, based on future projections, including the future reversal of existing taxable temporary differences. No uncertain tax positions have been identified for fiscal 2017, 2016, or 2015.