Income Taxes

12 Months Ended

Dec. 31, 2019

INCOME TAXES:

The components of income tax expense (benefit) were as follows:



	For The Years Ended December 31,
	2019			2018			2017
Current:
U.S. Federal	$	15,905		$	20,634		$	65,856
U.S. State	4,717			3,240			2,732
Non-U.S.	1,336			1,436			2,030
	21,958			25,310			70,618
Deferred:
U.S. Federal	(9,386		)	(7,509		)	17,397
U.S. State	(8,033		)	(8,973		)	(787		)
	(17,419		)	(16,482		)	16,610

Total Income Tax Expense	$	4,539		$	8,828		$	87,228

A reconciliation of income tax expense (benefit) and the amount computed by applying the statutory federal income tax rate of 21% to income from operations before income tax is:



	For the Years Ended December 31,
	2019					2018					2017
	Amount			Percent		Amount			Percent		Amount			Percent
Statutory U.S. federal income tax rate	$	20,600		21.0	%	$	39,399		21.0	%	$	59,429		35.0	%
State income taxes, net of federal tax benefit	3,125			3.2		3,240			1.7		1,264			0.7
Foreign income taxes	1,336			1.4		1,436			0.8		—			—
Excess tax depletion	(13,141		)	(13.4	)	(20,873		)	(11.1	)	(24,216		)	(14.3	)
Effect of domestic production activities	—			—		—			—		(6,493		)	(3.8	)
Effect of change in U.S. tax law	—			—		2,777			1.5		58,558			34.5
Excess compensation	1,849			1.9		974			0.5		—			—
Effect of valuation allowance	1,400			1.4		(1,379		)	(0.7	)	1,379			0.8
Tax credits	(2,536		)	(2.6	)	(980		)	(0.5	)	—			—
Non-controlling interest	(3,687		)	(3.8	)	(5,420		)	(2.9	)	—			—
State rate change and prior period adjustments	(5,745		)	(5.9	)	(8,223		)	(4.4	)	—			—
Other	1,338			1.4		(2,123		)	(1.1	)	(2,693		)	(1.6	)
Income Tax Expense / Effective Rate	$	4,539		4.6	%	$	8,828		4.8	%	$	87,228		51.3	%

Significant components of deferred tax assets and liabilities were as follows:



	December 31,
	2019			2018
Deferred Tax Asset:
Postretirement benefits other than pensions	$	110,504		$	108,603
Asset retirement obligations	60,260			57,956
Pneumoconiosis benefits	52,521			41,632
Mine subsidence	17,110			15,097
Financing	16,806			9,387
Workers' compensation	16,750			16,016
Salary retirement	14,761			15,855
Operating lease liabilities	14,757			—
State bonus, net of Federal	7,042			6,042
Long-term disability	3,031			2,798
Foreign tax credits	1,400			—
Other	6,297			6,669
Total Deferred Tax Asset	321,239			280,055
Valuation Allowance	(1,400		)	—
Net Deferred Tax Asset	319,839			280,055

Deferred Tax Liability:
Property, plant and equipment	(173,849		)	(175,558		)
Equity Partnerships	(17,028		)	(16,638		)
Right of use assets	(14,757		)	—
Advance mining royalties	(10,700		)	(10,314		)
Total Deferred Tax Liability	(216,334		)	(202,510		)

Net Deferred Tax Asset	$	103,505		$	77,545

As required by U.S. GAAP, a valuation allowance is required when it is more likely than not that all or a portion of a deferred tax asset will not be realized. Management must review all available evidence, both positive and negative, in determining the need for a valuation allowance. For the years ended December 31, 2019 and 2018, positive evidence considered included pretax cumulative income over the past three years, utilization of previous period net operating losses, financial forecasts of future earnings, reversals of financial to tax temporary differences, and the implementation of and/or ability to employ various tax planning strategies. Negative evidence included the tax loss generated in the year ended December 31, 2017 and the ability to fully utilize certain tax assets as a result of the enactment of Public Law 115-97, commonly known as the Tax Cuts and Jobs Act. Management assessed both the federal and deferred state tax attributes for all subsidiaries during the period. After considering all available evidence, both positive and negative, management has determined that a valuation allowance in the amount of $1,400 is appropriate to fully value the amount of the foreign tax credit carryforwards that were generated in the current year. It is anticipated that these foreign tax credit carryforwards will expire before being utilized.

On December 22, 2017, the President of the United States signed Public Law 115-97 “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018,” commonly referred to as the Tax Cuts and Jobs Act (“Tax Bill”). Under U.S. GAAP, the effects of new legislation are recognized upon enactment, which, for federal legislation, is the date the President signs a bill into law. Accordingly, recognition of the tax effects of the Tax Bill were required in the interim and annual periods that included December 22, 2017. The SEC also released Staff Accounting Bulletin 118 on December 22, 2017. This bulletin clarified certain aspects of Accounting Standards Codification (“ASC”) 740 and provided a three-step process for applying ASC 740. The Company has evaluated the impact of the Tax Bill and has recorded the following impacts in its financial statements. On December 22, 2017, the Company recorded tax expense of $58,558, and reduced the net deferred tax asset on its balance sheet by the same amount, primarily because the federal corporate income tax rate was reduced from 35% to 21% for all periods after December 31, 2017. During the year ended December 31, 2018, the Company completed its review of the applicable provisions of the Tax Bill and recognized an additional expense of $2,777, primarily related to return to provision adjustments.

The Company utilizes the “more likely than not” standard in recognizing a tax benefit in its financial statements. For the years ended December 31, 2019 and 2018, the Company did not have any unrecognized tax benefits. If accrual for interest or penalties is required, it is the Company’s policy to include these as a component of income tax expense.

The Company is subject to taxation in the United States, as well as various states, and Canada, as well as various provinces. Under the provisions of the TMA, certain subsidiaries of the Company are subject to examination for tax years for the period January 1, 2016 through December 31, 2019 for certain state and foreign returns. Further, the Company is subject to examination for the period November 28, 2017 through December 31, 2019 for federal and certain state returns.