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10-K
KEY ENERGY SERVICES INC filed this Form 10-K on 02/28/2018
Entire Document
 
Key Energy Services, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



Reduction of the U.S. Corporate Income Tax Rate- We measure deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the temporary differences are expected to reverse. Accordingly, our deferred tax assets and liabilities were re-measured to reflect the reduction in the U.S. corporate income tax rate from 35% to 21%, resulting in a provisional $82.4 million income tax expense recorded. However, this change also resulted in a corresponding provisional $82.4 million income tax benefit with respect to the existing valuation allowance recorded against our net deferred tax assets as of December 31, 2017. Both offsetting provisional amounts were recorded during the fourth quarter of 2017.
As we do not have all the necessary information to analyze all effects of the 2017 Tax Act, we believe the provisional amounts recorded during the fourth quarter of 2017 represent a reasonable estimate of the accounting implications of this U.S. tax reform. Our ultimate determination of the tax impacts may differ from the provisional amounts recorded during the fourth quarter of 2017 due to regulatory guidance expected to be issued in the future, any tax law technical corrections, and possible changes in the our interpretations, assumptions, and actions taken as a result of tax legislation clarification. In addition, we are still analyzing certain aspects of the 2017 Tax Act and refining our calculations, which could potentially affect the measurement of these provisional balances. We will continue to evaluate the 2017 Tax Act, and any adjustment to these provisional amounts will be reported in the reporting period in which any such adjustments are determined, which will be no later than the fourth quarter of 2018.
The components of our income tax expense are as follows (in thousands):
 
Successor
 
 
Predecessor
 
Year Ended December 31, 2017
 
Period from December 16, 2016 through December 31, 2016
 
 
Period from January 1, 2016 through December 15, 2016
 
Year Ended December 31, 2015
Current income tax (expense) benefit
$
1,667

 
$

 
 
$
(2,042
)
 
$
3,522

Deferred income tax (expense) benefit
35

 

 
 
(787
)
 
189,327

Total income tax (expense) benefit
$
1,702

 
$

 
 
$
(2,829
)
 
$
192,849


We made federal income tax payments of zero for the year ended December 31, 2017, the period from December 16, 2016 through December 31, 2016, the period from January 1, 2016 through December 15, 2016 and the year ended December 31, 2015, respectively. In addition, we received federal income tax refunds of zero, $0.4 million, $6.9 million and $11.9 million during the year ended December 31, 2017, the period from December 16, 2016 through December 31, 2016, the period from January 1, 2016 through December 15, 2016 and the year ended December 31, 2015, respectively.

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