|9 Months Ended|
Sep. 30, 2019
|Income Tax Disclosure [Abstract]|
The income tax expense rate for the three months ended September 30, 2019 and 2018 was (4.8)% and 11.2%, respectively, and for the nine months ended September 30, 2019 and 2018 was (0.1)% and (3.2)%, respectively. The differences between the actual consolidated effective income tax rate and the U.S. federal statutory rate were primarily attributable to an increase in valuation allowance on deferred tax assets, the allocation of losses on noncontrolling interests and redeemable noncontrolling interests, and stock compensation deductions.
The Company sells solar energy systems to investment Funds. As the investment Funds are consolidated by the Company, the gain on the sale of the assets has been eliminated in the consolidated financial statements, however gains on sale are recognized for tax purposes.
Tax Cuts and Jobs Act
On December 22, 2017, the U.S, government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). While the Company has fully accounted for the impact of the Tax Act, the U.S. Treasury released proposed regulations under IRC Sec. 451(c) related to the recognition of advanced payments for goods and services on September 5, 2019. The Company is still analyzing the proposed regulations and expects to complete its assessment in the fourth quarter. The Company does not expect the proposed regulations to have a material impact to the current tax expense given the Company's NOL carryforwards.
Uncertain Tax Positions
As of September 30, 2019 and December 31, 2018, the Company had $0.0 million and $0.6 million, respectively, of unrecognized tax benefits related to an acquisition in 2015. During the nine months ended September 30, 2019, the Company recorded an income tax benefit of $0.6 million from the release of unrecognized tax benefits and $0.2 million from the release of interest and penalties due to the expiration of federal and California statute of limitations. As of September 30, 2019, the Company has no other uncertain tax positions.
Net Operating Loss CarryforwardsAs a result of the Company’s net operating loss carryforwards as of September 30, 2019 and December 31, 2018, the Company does not expect to pay income tax for federal or state income tax purposes, including in connection with its income tax provision for the nine months ended September 30, 2019. As of December 31, 2018, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $769.0 million and $664.0 million, respectively, which will begin to expire in 2028 for federal purposes and in 2024 for state purposes. In addition, federal and certain state net operating loss carryforwards generated in tax years beginning after December 31, 2017 total $331.0 million and $444.0 million, respectively, and have indefinite carryover periods and do not expire.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef