NOTE 11 – INCOME TAXES

The components of the Company’s United States and foreign provision for income taxes were as follows for the years ended December 31 (in millions):


	2019		2018		2017
Current:
Federal	$	(0.3)	$	(0.1)	$	(0.1)
State		3.7		4.0		1.3
Total current taxes		3.4		3.9		1.2
Deferred:
Federal		(45.5)		(10.9)		(51.4)
State		(11.6)		(7.4)		(1.9)
Foreign		(0.9)		(1.5)		(0.2)
Total deferred taxes		(58.0)		(19.8)		(53.5)
Benefit for income taxes	$	(54.6)	$	(15.9)	$	(52.3)

A reconciliation between the effective income tax rate and the United States statutory income tax rate for the years ended December 31, 2019, 2018 and 2017 is as follows (in millions):


	2019			2018			2017
Income tax benefit at United States statutory income tax rate	$	(76.1)		$	(4.4)		$	(8.8)
Federal income tax effects of:
State income tax expense		(6.2)			(2.7)			(0.3)
Foreign taxes		—			—			(0.2)
Foreign tax rate differential		(0.8)			(0.3)			0.1
Goodwill impairment		23.4			—			—
Per diem and other nondeductible expenses		2.3			4.1			3.2
Change in valuation allowance		1.2			—			—
Cumulative effect of change in effective tax rate		—			(12.6)			(46.1)
Tax credits		(0.3)			(0.1)			(0.1)
Other		1.9			0.1			(0.1)
Benefit for income taxes	$	(54.6)		$	(15.9)		$	(52.3)
Effective tax rate		15.1	%		75.4	%		206.8	%

The decrease in the effective tax rate for the year ended December 31, 2019 compared to the year ended December 31, 2018 is primarily the result of a one-time benefit in 2018 related to the remeasurement of the net deferred tax liability as a result of the Tax Cuts and Jobs Act (TCJA) combined with a significant one-time tax cost in 2019 related to the impairment of goodwill for which there was no tax basis. The decrease in the effective tax rate for the year ended December 31, 2018 compared to the year ended December 31, 2017 is primarily the result of a one-time tax benefit related to changes in future tax rates on net deferred tax liabilities as a result of the enactment of the TCJA in December 2017.

United States Tax Reform

On December 22, 2017, the United States government enacted the TCJA comprehensive tax reform legislation . Effective January 2018, the TCJA, among other things, reduces the marginal U.S. corporate income tax rate from 35% to 21%, limits the deductibility of interest expenses, limits the deduction for net operating losses, eliminates net operating loss carrybacks and modifies or eliminates many business deductions and credits. The TCJA also includes international provisions, which generally establish a territorial-style system for taxing foreign source income of domestic multinational corporations and imposes a mandatory one-time transition tax on undistributed international earnings.

The effects of temporary differences that give rise to significant elements of deferred tax assets and liabilities at December 31, 2019 and 2018 were as follows (in millions):


	2019		2018
Deferred tax assets
Accrued expenses	$	7.0	$	5.3
Vacation accrual		0.6		0.6
Accounts receivable		0.8		0.4
Net operating losses		30.2		31.7
Interest expense limitation		—		1.3
Deferred start-up costs		1.3		1.4
Stock based compensation		1.5		1.3
Operating lease liabilities		20.6		—
Foreign assets		9.0		1.7
		71.0		43.7
Valuation allowance		(7.4)		—
Total deferred tax assets		63.6		43.7

Deferred tax liabilities
Sales-type leases		—		(2.3)
Prepaid expenses		(4.7)		(4.1)
481(a) adjustment		(0.9)		(1.7)
Intangible assets		(19.4)		(44.0)
Property and equipment		(82.9)		(111.7)
Right of Use Asset		(18.9)		—
Foreign liabilities		(6.7)		(6.7)
Total deferred tax liabilities		(133.5)		(170.5)

Net deferred tax liability	$	(69.9)	$	(126.8)

During the year ended December 31, 2019, the Company established a valuation allowance of $6.1 million against a portion of its foreign deferred tax assets that, in the judgement of management, are not more likely than not to be realized. As of December 31, 2019, the valuation allowance was $7.4 million. In assessing the realizability of 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 depends on the generation of future taxable income during the periods in which those temporary differences are deductible.

At December 31, 2019, the Company has U.S. federal net operating loss carry forwards of approximately $109.0 million on a pre-tax basis. The Company has state and foreign net operating losses of $4.7 million and $8.4 million, respectively, on an after tax basis. These loss carryforwards begin expiring in 2023.

The Company had no uncertain tax positions as of December 31, 2019 and 2018. The Company is no longer subject to United States federal income tax examinations by tax authorities for years before 2016; however, federal net operating loss carry forwards from years prior to 2016 remain subject to review and adjustment by tax authorities. The Company is no longer subject to state income tax examinations by tax authorities for years before 2015.