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SEC Filings
10-K
TERRAFORM POWER, INC. filed this Form 10-K on 07/21/2017
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As of December 31, 2016, TerraForm Power owns 65.7% of Terra LLC and consolidates the results of Terra LLC through its controlling interest. The Company records SunEdison's 34.3% ownership of Terra LLC as a non-controlling interest in the financial statements. Terra LLC is treated as a partnership for income tax purposes. As such, the Company records income tax on its 65.7% of Terra LLC's taxable income and SunEdison records income tax on its 34.3% share of Terra LLC's taxable income.

For the year ended December 31, 2016, the overall effective tax rate was different than the statutory rate of 35% primarily due to loss allocated to the recording of a valuation allowance on certain tax benefits attributed to the Company, loss
allocated to non-controlling interests, the impairment of goodwill at Capital Dynamics and the effect of state taxes. For the year ended December 31, 2015, the overall effective tax rate was different than the statutory rate of 35% primarily due to the recording of a valuation allowance on certain tax benefits attributed to the Company, loss allocated to non-controlling interests and due to the application of the intraperiod allocation rules, resulting in a significant tax provision recorded in other comprehensive income. For the year ended December 31, 2014, the tax benefits for losses realized prior to the IPO were recognized primarily because of existing deferred tax liabilities. As of December 31, 2016 and 2015, most jurisdictions were in a net deferred tax asset position. A valuation allowance is recorded against the deferred tax assets primarily because of the history of losses in those jurisdictions.

The tax effects of the major items recorded as deferred tax assets and liabilities were as follows:
 
 
As of December 31,
(In thousands)
 
2016
 
2015
Deferred tax assets:
 
 
 
 
Net operating losses and tax credit carryforwards
 
$
463,940

 
$
217,834

Investment in partnership
 

 
123,253

Deferred revenue
 
743

 
743

Renewable energy facilities
 

 
11,667

Other
 
5,445

 

Total deferred tax assets
 
470,128

 
353,497

Valuation allowance
 
(419,875
)
 
(333,858
)
Net deferred tax assets
 
50,253

 
19,639

Deferred tax liabilities:
 
 
 
 
Investment in partnership
 
73,629

 
45,269

Renewable energy facilities
 
4,347

 

Other
 

 
1,000

Total deferred tax liabilities
 
77,976

 
46,269

Net deferred tax liabilities
 
$
27,723

 
$
26,630

    
The underlying renewable energy facilities are controlled under Terra LLC, and thus deferred tax assets and liabilities at the Company's portfolio companies are captured within the deferred tax asset for investment in partnership. The Company has gross net operating loss carryforwards of $990.6 million in the U.S. that will expire beginning in 2031 and gross net operating loss carryforwards of $214.1 million in foreign jurisdictions that will expire beginning in 2032. The Company believes that it is more likely than not that it will not generate sufficient taxable income to realize the deferred tax assets associated with its net operating losses and tax credit carryforwards and has recorded a valuation allowance against its deferred tax assets, with the exception of $69.2 million of net operating losses at its Canadian operations. The Company is currently performing an analysis of limitations on the use of net operating losses under Section 382. The results of this analysis could impact the Company's ability to use net operating losses in future periods or could reduce the net operating losses available.

As of December 31, 2016 and 2015, the Company had not identified any uncertain tax positions for which a liability was required.



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