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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)



Income tax (expense) benefit differs from amounts computed by applying the statutory federal rate as follows:
 
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
Income tax benefit computed at Federal statutory rate
35.0
 %
 
35.0
 %
 
 
35.0
 %
 
35.0
 %
State taxes
 %
 
 %
 
 
(9.1
)%
 
1.6
 %
Meals and entertainment
(0.4
)%
 
 %
 
 
(0.3
)%
 
(0.1
)%
Foreign rate difference
0.4
 %
 
 %
 
 
(0.3
)%
 
(1.3
)%
Non-deductible goodwill and asset impairments
 %
 
 %
 
 
(4.0
)%
 
(4.8
)%
Non-deductible bankruptcy costs
 %
 
 %
 
 
(15.7
)%
 
 %
Non-taxable cancellation of debt income
 %
 
 %
 
 
154.6
 %
 
 %
Penalties and other non-deductible expenses
 %
 
 %
 
 
(2.3
)%
 
 %
Sale of Mexico
 %
 
 %
 
 
16.5
 %
 
 %
Change in valuation allowance
(33.8
)%
 
(35.0
)%
 
 
(171.1
)%
 
(12.9
)%
Equity compensation
(1.0
)%
 
 %
 
 
 %
 
 %
US tax reform - impact to deferred tax assets and liabilities
(67.4
)%
 
 %
 
 
 %
 
 %
US tax reform - change in valuation allowance
67.4
 %
 
 %
 
 
 %
 
 %
Other
1.2
 %
 
 %
 
 
(5.5
)%
 
(0.1
)%
Effective income tax rate
1.4
 %
 
 %
 
 
(2.2
)%
 
17.4
 %
     As of December 31, 2017 and 2016, our deferred tax assets and liabilities consisted of the following (in thousands):
 
December 31,
 
2017
 
2016
Deferred tax assets:
 
 
 
Net operating loss and tax credit carryforwards
$
103,251

 
$
99,636

Capital loss carryforwards
16,375

 
49,901

Foreign tax credit carryforward
17,095

 
18,587

Self-insurance reserves
8,734

 
12,576

Accrued liabilities
9,479

 
16,542

Share-based compensation
513

 

Intangible assets
52,146

 
93,453

Other
1,036

 
2,946

Total deferred tax assets
208,629

 
293,641

Valuation allowance for deferred tax assets
(175,577
)
 
(227,402
)
Net deferred tax assets
33,052

 
66,239

Deferred tax liabilities:
 
 
 
Property and equipment
(33,052
)
 
(64,609
)
Other

 
(1,665
)
Total deferred tax liabilities
(33,052
)
 
(66,274
)
Net deferred tax asset (liability), net of valuation allowance
$

 
$
(35
)

The December 31, 2017 net deferred tax asset is comprised of $208.6 million deferred tax assets before valuation allowance, and $33.1 million deferred tax liabilities. The valuation allowance against the net deferred tax asset decreased by approximately $51.8 million from December 31, 2016 to December 31, 2017. The decrease was primarily due to the reduction of the U.S. corporate income tax rate from enactment of the 2017 Tax Act.

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