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INCOME TAXES
 12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
INCOME TAXES
INCOME TAXES
Our U.S. timber operations are primarily conducted by our REIT entity and are generally not subject to U.S. federal and state income taxation. Our New Zealand timber operations are conducted by the New Zealand subsidiary, which is subject to corporate-level tax in New Zealand. Our non-REIT qualifying operations, which are subject to corporate-level tax, are held by various TRS entities. These operations include our log trading business and certain real estate activities, such as the sale, entitlement and development of HBU properties.
PROVISION FOR INCOME TAXES FROM CONTINUING OPERATIONS
The provision for income taxes for each of the three years ended December 31 follows:
 
2019
 
2018
 
2017
Current
 
 
 
 
 
U.S. federal

$2

 

$2

 

$261

State
(122
)
 
37

 
(38
)
Foreign
(1,542
)
 
(1,914
)
 
(245
)
 
(1,662
)
 
(1,875
)
 
(22
)
Deferred
 
 
 
 
 
U.S. federal
465

 
3,803

 
13,028

State
17

 
146

 
—

Foreign
(11,278
)
 
(23,360
)
 
(21,659
)
 
(10,796
)
 
(19,411
)
 
(8,631
)
Changes in valuation allowance
(482
)
 
(3,950
)
 
(13,028
)
Total

($12,940
)
 

($25,236
)
 

($21,681
)

A reconciliation of the U.S. federal statutory income tax rate to the actual income tax rate for each of the three years ended December 31 follows:
 
 
2019
 
2018
 
2017
U.S. federal statutory income tax rate
 

($16,930
)
 
(21.0
)%
 

($29,939
)
 
(21.0
)%
 

($64,141
)
 
(35.0
)%
U.S. and foreign REIT income
 
19,902

 
24.7

 
32,949

 
23.1

 
63,813

 
34.8

Matariki Group and Rayonier New Zealand Ltd
 
(11,181
)
 
(13.9
)
 
(23,166
)
 
(16.2
)
 
(19,182
)
 
(10.5
)
Transition tax
 
—

 
—

 
—

 
—

 
(3,506
)
 
(1.9
)
Change in valuation allowance
 
(482
)
 
(0.6
)
 
(3,950
)
 
(2.8
)
 
(13,028
)
 
(7.1
)
ASU No. 2016-16 adoption impact
 
—

 
—

 
—

 
—

 
16,631

 
9.1

Deemed repatriation of unremitted foreign earnings
 
—

 
—

 
—

 
—

 
7,368

 
4.0

Reduction of deferred tax asset for statutory rate change
 
—

 
—

 
—

 
—

 
(10,499
)
 
(5.7
)
Internal transfer of assets deferred
 
(1,815
)
 
(2.3
)
 
—

 
—

 
—

 
—

Foreign income tax withholding
 
(1,535
)
 
(1.9
)
 
(1,848
)
 
(1.3
)
 
—

 
—

Other
 
(899
)
 
(1.1
)
 
718

 
0.5

 
863

 
0.5

Income tax expense as reported for net income
 

($12,940
)
 
(16.1
)%
 

($25,236
)
 
(17.7
)%
 

($21,681
)
 
(11.8
)%

The Company’s effective tax rate is below the 21 percent U.S. statutory rate primarily due to tax benefits associated with being a REIT.
DEFERRED TAXES
Deferred income taxes result from differences between the timing of recognizing revenues and expenses for financial book purposes versus income tax purposes. The nature of the temporary differences and the resulting net deferred tax asset/liability for the two years ended December 31 follows:
 
2019
 
2018
Gross deferred tax assets:
 
 
 
Pension, postretirement and other employee benefits

$1,512

 

$1,791

New Zealand subsidiary
23,211

 
14,252

CBPC tax credit carry forwards
14,555

 
14,555

Capitalized real estate costs
6,635

 
7,386

U.S. TRS net operating loss
5,410

 
5,747

Land basis difference
10,626

 
11,282

Other
4,356

 
4,047

Total gross deferred tax assets
66,305

 
59,060

Less: Valuation allowance
(39,320
)
 
(38,839
)
Total deferred tax assets after valuation allowance

$26,985

 

$20,221

Gross deferred tax liabilities:
 
 
 
Accelerated depreciation
(23
)
 
(73
)
New Zealand subsidiary
(87,548
)
 
(66,430
)
Timber installment sale
—

 
(4,823
)
Other
(3,938
)
 
(1,272
)
Total gross deferred tax liabilities
(91,509
)
 
(72,598
)
Net deferred tax liability reported as noncurrent

($64,524
)
 

($52,377
)

Foreign net operating loss (“NOL”) and tax credit carryforwards as of the two years ended December 31 follows: 
 
Gross
Amount
 
Valuation
Allowance
 
Expiration
2019
 
 
 
 
 
New Zealand subsidiary NOL carryforwards

$11,650

 
—

 
None
U.S. net deferred tax asset
24,765

 
(24,765
)
 
None
Cellulosic Biofuel Producer Credit (a)
14,555

 
(14,555
)
 
2023
Total Valuation Allowance
 
 

($39,320
)
 
 
2018
 
 
 
 
 
New Zealand subsidiary NOL carryforwards

$31,052

 
—

 
None
U.S. net deferred tax asset
24,284

 
(24,284
)
 
None
Cellulosic Biofuel Producer Credit (a)
14,555

 
(14,555
)
 
2019
Total Valuation Allowance
 
 

($38,839
)
 
 

 
 
 
 
(a)
The Further Consolidated Appropriations Act, 2020 was signed into law on December 20, 2019. The Further Consolidated Appropriations Act, 2020 included the Taxpayer Certainty and Disaster Relief Act of 2019 (Tax Extenders Act), which temporarily renewed approximately two dozen credits that previously expired or were set to expire at the end of 2019. The Cellulosic Biofuel Producer Credit was one of the credits extended under this act.

UNRECOGNIZED TAX BENEFITS
A reconciliation of the beginning and ending unrecognized tax benefits for the three years ended December 31 follows:
 
2019
 
2018
 
2017
Balance at January 1,
—

 
—

 

$135

Decreases related to prior year tax positions (a)
—

 
—

 
(135
)
Increases related to prior year tax positions
—

 
—

 
—

Balance at December 31,
—

 
—

 
—

 
 
 
 
(a)
Result of a lapse of the applicable statute of limitations.
The Company records interest (and penalties, if applicable) related to unrecognized tax benefits in non-operating expense. The Company recorded no benefit to interest expense in 2019, 2018 and 2017, respectively and had no recorded liabilities for the payment of interest at December 31, 2019 and 2018.
TAX STATUTES
The following table provides detail of the tax years that remain open to examination by the IRS and other significant taxing jurisdictions:
Taxing Jurisdiction
Open Tax Years
U.S. Internal Revenue Service
2016 - 2018
New Zealand Inland Revenue
2014 - 2018