18. Income Taxes

The income tax provision (benefit) for the years ended March 31, 2020, 2019, and 2018 was as follows:


		Year Ended		Year Ended		Year Ended
		March 31, 2020		March 31, 2019		March 31, 2018
Current:
Federal	$	—	$	—	$	—
State		568		—		—
Current income tax provision (benefit)		568		—		—
Deferred:
Federal		(113,523)		(15,468)		(116,563)
State		(30,299)		(3,127)		(3,058)
Deferred income tax provision (benefit)		(143,822)		(18,595)		(119,621)
Total income tax provision (benefit)	$	(143,254)	$	(18,595)	$	(119,621)

Effective Tax Rate

The reconciliation between the federal statutory rate and the effective income tax rate is as follows:


	Year Ended		Year Ended		Year Ended
	March 31, 2020		March 31, 2019		March 31, 2018
Statutory U.S. federal tax rate	21.0	%	21.0	%	31.5	%
State income taxes (net of federal benefit)	2.1		3.5		3.6
Remeasurement of deferred tax assets and liabilities arising from the Tax Legislation	—		—		166.9
Change in fair value of equity based awards	(1.2)		1.0		—
Look through accounting policy election	2.1
Research and development credit	0.2		1.6		2.4
Goodwill impairment charge	(10.8)
Other	(0.3)		(0.8)		(0.5)
Effective income tax rate	13.1	%	26.3	%	203.9	%

Deferred Tax Assets and Liabilities

For the years ended March 31, 2019 and earlier, the Company recorded its deferred tax assets and liabilities with respect to its investment in the Joint Venture under the outside basis approach. As a result of the Merger, the Company elected to begin recording those deferred tax assets and liabilities under the look through approach. As a result, the change in the deferred tax assets and liabilities in the year ended March 31, 2020 reflects the impact of both the Company’s change in accounting for its investment in the Joint Venture to the look through approach as well as the application of the guidance in ASC 805 for a business combination achieved in stages as described in Note 2, Business Combinations. The change from the outside basis approach to the look through approach resulted in the reduction of the Company’s deferred tax liability associated with its investment in the Joint Venture by $28,576.

Significant components of the Company’s deferred tax assets (liabilities) were as follows:


	March 31,		March 31,
	2020		2019
Investment in the Joint Venture	$	—	$	(190,448)
Depreciation and amortization		(1,034,407)		—
Accounts receivable		5,793		—
Fair value of interest rate cap agreements		14,011		—
Accruals and reserves		15,680		—
Net operating losses		348,329		19,958
Debt discount and interest		(9,661)		—
Equity compensation		18,560		—
Valuation allowance		(29,350)		—
Tax receivable agreements obligations to related parties		68,900		—
163(j) Business interest expense limitation		23,842		7,711
Tax credits		16,629		2,786
Accounting method change (ASC 606 adoption)		(31,886)		—
Residual deferred tax asset		12,072		—
Other		(3,696)		—
Net deferred tax assets (liabilities)	$	(585,184)	$	(159,993)
Reported as:
Non-current deferred tax assets		30,720		—
Non-current deferred tax liabilities		(615,904)		(159,993)
Net deferred tax assets (liabilities)	$	(585,184)	$	(159,993)

At March 31, 2020, the Company and its subsidiaries had net operating loss carryforwards for federal, state and foreign income tax purposes of $1,174,862, $1,833,161, and $15,260, respectively, which expire from 2026 through 2040, 2020 through 2040 and 2028 through 2037, respectively. A portion of net operating loss carryforwards may be subject to an annual limitation regarding their utilization against taxable income in future periods due to “change of ownership” provisions of the Internal Revenue Code and similar state provisions. However, we do not believe that the limitation will impact the Company’s ability to utilize the net operating loss carryforwards.

At March 31, 2020, the Company and its subsidiaries had research and development (R&D) tax credit carryforwards for federal and state income tax purposes of $16,302 and $413, respectively. The federal credits expire from 2038 through 2040, while $116 of the state credits have an indefinite carryforward period and $197 of the state credits expire from 2033 through 2035.

The Company believes that it is more likely than not that the benefit from certain state and foreign net operating loss carryforwards and a residual deferred tax asset recorded in the look through approach will not be realized. In recognition of this risk, the Company has provided a valuation allowance of $17,279 on the deferred tax assets related to these state and foreign net operating loss carryforwards and a valuation allowance of $12,701 on the residual deferred tax asset. If recognized, the tax benefits related to any reversal of the valuation allowance on deferred tax assets as of March 31, 2020, will be accounted for as a reduction of income tax expense of $26,403.

Unrecognized Tax Benefits

The federal, state, and foreign net operating loss carryforwards and R&D and tax credits within the income tax returns filed included unrecognized tax benefits. The deferred tax assets recognized for those net operating losses and R&D credits are presented net of these unrecognized tax benefits.

A reconciliation of unrecognized tax benefits is as follows:


		Year Ended		Year Ended
		March 31, 2020		March 31, 2019
Beginning unrecognized benefit	$	863	$	—
Decreases from prior period tax positions		(2)		—
Increases from prior period tax positions		—		432
Increases from current period tax positions		769		431
Increases from acquisition		54,547		—
Ending unrecognized benefit	$	56,177	$	863

If the above unrecognized tax benefits were recognized, $46,672 would affect the effective income tax rate.

The Company recognizes interest income and expense (if any) related to income taxes as a component of income tax expense. The Company recognized interest and penalties of $138, $0, and $0 for the years ended March 31, 2020, 2019 and 2018, respectively.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The U.S. federal and state income tax returns for certain subsidiaries of the Company remain subject to examination by the Internal Revenue Service for the tax years 2012 and beyond (i.e., periods prior to the Transactions). With respect to state and local jurisdictions and international countries, the Company and its subsidiaries are typically subject to examination for a number of years after the income tax returns have been filed. Although the outcome of tax audits is always uncertain, the Company believes that adequate amounts of tax, interest and penalties have been provided for in the consolidated financial statements for any adjustments that may be incurred due to state, local or foreign audits.

Tax Legislation Updates

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted. Included in the CARES Act are numerous income tax provisions including changes to the net operating loss rules and the business interest expense deduction rules under Code Section 163(j). The Company anticipates benefiting from the changes to the business interest expense deduction rules which temporarily increase the amount of interest expense that businesses are allowed to deduct on their tax returns by increasing the 30% Adjusted Taxable Income limitation to 50% for corporations for tax years 2019 and 2020. Such benefit resulted in an increase in the amount of deductible interest available to the Company. However, this did not result in any immediate change to the Company’s tax position given the amount of net operating losses currently available.

In addition, the CARES Act accelerates the remaining alternative minimum tax (“AMT”) credit refund allowances resulting in taxpayers being able to immediately claim a refund in full for any AMT credit carryforwards, which should provide the Company with the accelerated receipt of its AMT credit refund of $869.